TPG hit with sell-offs as ACCC calls foul on Telstra network sharing plan
Telstra is set to appeal the ACCC's decision, but watchdog resolute in its stance
Source: iStock
Mentioned
KEY POINTS
- Telstra has said it will contest the Australian Competition and Consumer Commission’s (ACCC) decision
- Telstra and TPG were to share mobile networks in regional parts of Australia, ACCC says hands Telstra too much power
- Telstra shares trading flat in afternoon trades; but TPG among the day’s biggest fallers
The ACCC has today blocked a proposed deal between TPG Telecom (ASX:TPG) and Telstra (ASX:TLS) to share mobile networks in regional parts of Australia.
The watchdog believes TPG and Telstra combining networks would further establish Telstra’s market dominance in Australia in such a manner customers would be worse off.
Telstra on Wednesday told the market it will appeal the ACCC decision.
“This innovative agreement will deliver real competition-driven benefits for regional Australia, something recognised by the ACCC…[its] decision is a massive missed opportunity,” Telstra boss Vicki Brady said.
Brady put it to the market that the deal would see Telstra unlock mobile network spectrum allocation held by TPG in regional areas, but which currently isn’t used.
TPG shareholders take a hit
Telstra shares are trading up 0.12% in mid-afternoon trades, effectively flat.
TPG Telecom, however, is down -2% in the same period; losses earlier in the trading day saw the share price down -4%.
Since Monday, TPG’s share price (a company with an $8.6bn market cap as at 1430AEST Wednesday 21 December) has fallen from $4.85 to $4.67 today.
TPG equally concerned as Telstra
TPG boss Iñaki Berroeta echoed Vicki Brady’s sentiments today, saying the company will “carefully review” ACCC’s decision.
“[Denial of] the TPG Telecom Telstra network sharing arrangement is a missed opportunity to deliver greater competition,” Berroeta said.
“If it had been authorised, the arrangement would have freed regional Australia from its current mobile duopoly, and the increased competition from TPG would have placed downward pressure on mobile pricing.”
ACCC sees it differently
The ACCC, of course, is less optimistic.
“While there are some benefits, it is our view that the proposed arrangements will likely lead to less competition in the longer term,” watchdog commissioner Liza Carver said.
“Any reduction in competition will have very wide-ranging impacts on customers, including higher prices and reduced quality and coverage,” Carver added, highlighting the embedded role of mobile networks in modern-day society.
Carver says the deal would fundamentally restructure the mobile network landscape in Australia.
Adding to its concerns are some 170 submissions it received during a consultation period regarding the mobile network deal with criticisms largely focused on the lack of competition, were the deal to go ahead.
A look at TPG's six month charts
