Could the decision to block the TPG-Vodafone merger leave phone users worse off? By business reporter Stephen Letts Photo: Disconnected: The proposed merger between TPG and Vodafone has been blocked by the ACCC There was one big idea behind the ACCC's decision to block the proposed $15 billion TPG-Vodafone Hutchison Australia merger. Having studied the sprawling, brawling telecommunications industry from all angles, the competition regulator decided two welterweight contenders fighting from different corners, with different techniques, offered a better shot at taking on the industry heavyweights than one bulked-up middleweight. In ACCC chair Rod Sims' opinion, the nimble TPG — weighing in with a market capitalisation of $5.6 billion — is the last contender left in the mobile market to take on the $40 billion Telstra and Optus, which is backed by the even bigger Singaporean champ Singtel. "TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services," Mr Sims said in a hastily published statement, after news of the ACCC's action was inadvertently leaked by the ACCC itself. It's a big ask. Telstra has incumbency, experience and the biggest and best mobile network across the nation. TPG doesn't. Putting that aside, Mr Sims was also happy to offer TPG a bit of strategic business advice, free of charge. "Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices," he said. Given it is an "commercial imperative" in the ACCC's estimation, one could reasonably conclude if TPG doesn't follow the advice it will be out of business sooner or later. TPG probably muttered to itself, "Thanks for that" as it shed another $700 million in value after Mr Sims' pep talk. Photo: ACCC chair Rod Sims says it it imperative for TPG to develop a its own mobile network TPG boxed into a corner The ACCC noted TPG had overcome the odds before with "a proven track record of disrupting the telecommunications sector", but that was largely in the broadband game. Sure, TPG had shaped up to take on the mobile market. It had even taken an audacious swing once, announcing plans to roll out its own mobile network two years ago using Chinese Huawei equipment. Those plans were shelved earlier this year, under the cover the Federal Government's 5G security guidance on Huawei. However, the standalone mobile roll out, costed around $600 million, was always going to be a financial stretch for TPG. The total cost of the TPG plan was way less than the capex budgets of the big telcos. Telstra is rumoured to spend around $1.2 billion a year on its existing mobile network. So the TPG network was always going to be a pretty skeletal structure. The merger with the mobile-heavy, broadband-light Vodafone, annou
Could the decision to block the TPG-Vodafone merger leave phone users worse off? By business reporter Stephen Letts Photo: Disconnected: The proposed merger between TPG and Vodafone has been blocked by the ACCC There was one big idea behind the ACCC's decision to block the proposed $15 billion TPG-Vodafone Hutchison Australia merger. Having studied the sprawling, brawling telecommunications industry from all angles, the competition regulator decided two welterweight contenders fighting from different corners, with different techniques, offered a better shot at taking on the industry heavyweights than one bulked-up middleweight. In ACCC chair Rod Sims' opinion, the nimble TPG — weighing in with a market capitalisation of $5.6 billion — is the last contender left in the mobile market to take on the $40 billion Telstra and Optus, which is backed by the even bigger Singaporean champ Singtel. "TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services," Mr Sims said in a hastily published statement, after news of the ACCC's action was inadvertently leaked by the ACCC itself. It's a big ask. Telstra has incumbency, experience and the biggest and best mobile network across the nation. TPG doesn't. Putting that aside, Mr Sims was also happy to offer TPG a bit of strategic business advice, free of charge. "Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices," he said. Given it is an "commercial imperative" in the ACCC's estimation, one could reasonably conclude if TPG doesn't follow the advice it will be out of business sooner or later. TPG probably muttered to itself, "Thanks for that" as it shed another $700 million in value after Mr Sims' pep talk. Photo: ACCC chair Rod Sims says it it imperative for TPG to develop a its own mobile network TPG boxed into a corner The ACCC noted TPG had overcome the odds before with "a proven track record of disrupting the telecommunications sector", but that was largely in the broadband game. Sure, TPG had shaped up to take on the mobile market. It had even taken an audacious swing once, announcing plans to roll out its own mobile network two years ago using Chinese Huawei equipment. Those plans were shelved earlier this year, under the cover the Federal Government's 5G security guidance on Huawei. However, the standalone mobile roll out, costed around $600 million, was always going to be a financial stretch for TPG. The total cost of the TPG plan was way less than the capex budgets of the big telcos. Telstra is rumoured to spend around $1.2 billion a year on its existing mobile network. So the TPG network was always going to be a pretty skeletal structure. The merger with the mobile-heavy, broadband-light Vodafone, annou
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