Both Telstra and TPG Telecom say they will appeal after the competition watchdog rejected their $1.8 billion network-sharing deal in regional areas.
The Australian Competition and Consumer Commission said on Wednesday it wasn’t convinced the public benefits from the arrangement would outweigh its likely detriments.
It also wasn’t satisfied about the other statutory test, that the arrangement wouldn’t be likely to substantially lessen competition.
“We examined the proposed arrangements in considerable detail,” ACCC Commissioner Liza Carver said in a statement.
“While there are some benefits, 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.”
Telstra chief executive Vicki Brady called the regulator’s decision extremely disappointing, especially given the support the deal had from regional customers and community groups.
“This decision is a massive missed opportunity for the people, businesses and communities of regional Australia,” she said.
“It also delivers better use of the government’s spectrum assets by unlocking unused spectrum that TPG holds in regional Australia but isn’t using.”
The deal would have seen TPG decommission or transfer up to 169 mobile sites in regional and urban fringe areas to Telstra, with TPG then acquiring mobile network services from Telstra.
TPG’s 4G coverage would have been able to reach a bit more of the population – 98.8 per cent versus 96 per cent – but the ACCC said that benefit wasn’t worth lessening the infrastructure-based competition the deal would entail.
In a statement, TPG said said it would carefully review the decision and was preparing an application to the Australian Competition Tribunal.
“We are disappointed the ACCC has chosen to ignore the overwhelming evidence submitted from leading economists, competition experts and regional communities outlining the benefits of the proposed arrangement to competition and consumer choice,” said TPG Telecom chief executive Inaki Berroeta.
Optus chief executive Kelly Bayer Rosmarin meanwhile called the ACCC’s ruling a win for regional communities.
“”By knocking back this deal, the ACCC has helped ensure that our regional communities will continue to benefit from competition in a sector that is fundamental to our digital economy and future prospects,” Ms Bayer Rosmarin said.
The 10-year deal was first announced in February. It would have delivered between $1.6 billion and $1.8 billion in revenue to Telstra over the decade, Telstra said at the time.
The ACCC said it examined more than 170 submissions and 40 witness statements and expert reports as part of its review.
At 11.17am AEDT on Wednesday, Telstra shares were flat at $4.04 while TPG shares were down 4.2 per cent to $4.57.