TPG-Telstra infrastructure sharing deal knocked back, again

The Australian Competition Tribunal has rejected a planned landmark infrastructure deal that would have allowed TPG Telecom to use Telstra’s towers in regional Australia, sending TPG shares tanking.

On Wednesday, the tribunal declined to authorise the network sharing arrangement, which is the second rejection of the $1.8 billion deal after the Australian Competition and Consumer Commission blocked it in December.

Optus, which had opposed the deal, hailed the decision as a win for competition.

TPG and Telstra both protested that the decision was a setback for mobile coverage in regional Australia, and TPG said it would consider lodging a further appeal in the Federal Court.

In rejecting the deal last year, the ACCC said it would have weakened competition and left customers worse off in the long term, and on Wednesday the tribunal upheld the ACCC’s ruling.

TPG shares were down 8.3 per cent to $5.10 in early trade, as the company said that if the network sharing arrangement did not ultimately proceed, it may need to increase its capital expenditure on its existing regional network. Telstra shares were 0.7 per cent higher at $4.45.

TPG chief executive Inaki Berroeta said the company was not “giving up regional Australia” and it would consider its options. These could include pursuing a judicial review in the Federal Court, or trying to re-jig the planned deal with Telstra.

“This determination entrenches the status quo for mobile coverage in regional Australia,” Berroeta said. “We remain committed to extending the reach and capability of our mobile network to regional Australia and will continue to explore our options to deliver great mobile service and value to our customers.”

Under the planned deal, it had been proposed that TPG would give Telstra access to its spectrum, in exchange for being able to use Telstra’s towers in regional Australia. Optus had slammed the proposed tie-up, claiming it would entrench Telstra’s market power and deter others from investing in regional telco infrastructure.