Australia’s competition watchdog rejects Telstra-TPG network sharing deal

Australian Competition & Consumer Commission (ACCC) on Wednesday rejected TPG Telecom’s network sharing agreement with Telstra Corp, saying the deal would significantly weaken competition in the country.

TPG – the country’s No. 2 internet service provider – said it was “disappointed” with the Australian competition regulator’s decision and is preparing an application for a review of the decision.

TPG’s shares were down 2 per cent in early trade on Wednesday, and Telstra was flat, while the broader market was up 1 per cent.

In February, the companies signed a regional multi-operator core network agreement under which Telstra, the country’s largest telecoms operator, would gain access to TPG’s 4G and 5G spectrums.

“It is our view that the proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage,” said ACCC Commissioner Liza Carver in a statement.

“The proposed arrangements would lock up valuable spectrum with Telstra, raising barriers to entry and expansion and reducing the incentives and ability of rivals to compete.”

The deal was expected to deliver between A$1.6 bln ($1.07 bln) and A$1.8 billion of revenue to Telstra over the initial 10-year term.

Australia’s second-largest mobile operator Optus, owned by Singapore Telecommunications, which had voiced concerns regarding the deal in the past, “welcomed” the regulator’s decision, the company said in press statement.

Telstra did not immediately respond to Reuters request for comment.

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