TPG shuts the door on network sharing with Optus

Vodafone’s owner TPG Telecom has shut the door on working with Optus if its landmark network sharing deal with Telstra is blocked by the competition regulator, warning that the outcome would leave its customers worse off.

The $9.1 billion telco giant wrote to the Australian Competition and Consumer Commission (ACCC) last week in an effort to shut down suggestions by Optus that it would engage on a similar deal. According to the letter, TPG and Optus had discussed an alternative roaming agreement, but Telstra was ultimately picked by TPG as its preferred partner.

“Now, having had the benefit of seeing the proposed transaction and its terms, Optus wishes to use the authorisation process to remove Telstra as a competitor in relation to network sharing and leave it free to impose a less attractive, alternative transaction on TPG,” the letter, written by lawyers from Gilbert+Tobin, said.

The ACCC is reviewing a proposal, first announced in February, that would allow Telstra and TPG to enter a long-term network sharing agreement. The regional network sharing deal would give TPG access to around 3700 Telstra towers across the regions and on urban fringes, in exchange for access to its 5G spectrum. The regulator is expected to decide on whether to approve the $1.8 billion deal by the end of the year, but is under pressure to nix it because of claims made by Optus and Nationals leader David Littleproud.

The ACCC has long advocated for more mobile players and unsuccessfully tried to block the $15 billion merger between Vodafone and TPG in 2019. It recently said that it accepted Optus’ key argument – it would be disincentivised to invest in regional Australia – and suggested Optus and TPG could team up for their own network sharing deal if the current proposal is not approved.

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Optus said last month a tie-up with TPG was “a real commercial likelihood” if the TPG-Telstra deal is rejected.

TPG and Telstra attempted to appease the regulator earlier this month, proposing to reduce the length of the network sharing deal from 10 years to eight. In its latest letter, which was sent in direct response to Optus’ recent claims it could negotiate with TPG, the telco said any deal would be a “perverse outcome”.

“It can be ascertained from Optus’ evidence that it was in the process of offering TPG an alternative roaming arrangement but was out-competed by Telstra with the proposed transaction,” the letter said.