Australia’s ACCC has sought more information before approving the mobile network deal between Telstra and TPG.
Telstra is Australia’s largest mobile network operator, while TPG is the third largest wireless carrier in Australia after Optus. Telstra operates more than 11,000 mobile base stations while TPG operates more than 5,600. Telstra’s network has 99.5 percent population coverage, while Optus has 98.5 percent and TPG has more than 96 percent respectively.
Telstra and TPG have the approval of ACCC for the acquisition of certain TPG spectrum, which is tied to three interrelated network agreements that are being considered together.
Telstra would obtain much of TPG’s mobile spectrum in a range of outer-suburban and regional areas, where about 17 percent of Australians live. Telstra would also obtain 169 of TPG’s mobile sites in that area.
TPG would then shut down its remaining 556 mobile sites in those areas and acquire mobile network services from Telstra for mobile coverage.
“We are assessing how the proposed infrastructure and spectrum arrangements between TPG and Telstra will change the incentives and ability of Telstra, TPG, Optus, and other market participants to compete and to invest in mobile service infrastructure,” ACCC Commissioner Liza Carver said releasing a statement of preliminary views.
“There is still a lot of work to do on this complicated and nuanced review, which is of critical importance to competition in the mobile telecommunication sector. At this stage we have not reached any overall conclusions.”
ACCC will announce the final decision on the deal between Telstra and TPG in early December.
THE COMPLICATED DEAL
Telstra and TPG have entered into three interrelated agreements in respect of a Multi-Operator Core Network (MOCN) commercial arrangement: a MOCN Service Agreement, a Spectrum Authorisation Agreement, and a Mobile Site Transition Agreement.
As per the deal, TPG authorises Telstra to use spectrum which it currently owns, and Telstra provides TPG with network services by way of active mobile network infrastructure sharing in certain regional and urban fringe areas (the Regional Coverage Zone), which comprise approximately 17 per cent of the Australian population coverage.
TPG would use the MOCN services supplied by Telstra to offer 4G and 5G retail and wholesale services in the Regional Coverage Zone. TPG would transfer up to 169 of its existing mobile sites in the Regional Coverage Zone to Telstra, and aims to decommission the remainder. The initial term of the MOCN Service Agreement is 10 years and TPG has two options to extend the agreement by 5 years.
TPG and Telstra will continue to operate their own networks in metropolitan areas where around 81.4 percent of Australia’s population resides. TPG and Telstra will also continue to operate their own mobile core networks (both in and outside the Regional Coverage Zone).