The battle over the Australian mobile market is headed to court after Telstra said it would appeal a ruling that blocked its network-sharing deal with TPG Telecom.

The Australian Competition and Consumer Commission (ACCC) said Wednesday it had rejected the arrangement on competition grounds.

ACCC Commissioner Liza Carver said the proposed deal "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."

Figure 1: Worker standing on a lifting platform and working on an antenna mast.
(Source: dpa picture alliance/Alamy Stock Photo)

"Entering into the arrangements proposed by Telstra and TPG will represent a significant change to the structure of the market that would have long-term consequences."

The agreement, announced in February, would allow Telstra, Australia's biggest operator, to access the regional spectrum holdings of number-three telco TPG, which in turn would be granted use of Telstra's mobile towers.

TPG said it would likely shut down around 700 of its own rural basestations, although the two companies will continue to operate their own core networks.

"The proposed arrangements would lead to some short-term benefits from an improvement in TPG's network coverage, and some cost savings and efficiencies for TPG and Telstra," Carver said.

'Entrench Telstra dominance'

"However, the enduring and more substantial impact of the proposed arrangements would be to lessen infrastructure-based competition which would make consumers, including those in regional areas, worse off over time."

Optus Communications, which had been the most outspoken critic of the deal, said the ACCC had affirmed three decades of policy designed to promote competition.

Optus Vice President Andrew Sheridan said in a statement: "From the outset we argued that this deal, which enabled TPG to quietly exit regional Australia, would entrench Telstra's dominance, especially in the regions."

Telstra said it would appeal the decision, which would put the case before the federal court.

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CEO Vicki Brady said the competition regulator's decision was disappointing, pointing out that the ACCC had acknowledged the network-sharing partnership would deliver some "real competition-driven benefits for regional Australia."

"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."

In the last appeal against an ACCC decision the court ruled in favor of the merger of TPG and Vodafone. The regulator had denied the deal, arguing it would lessen mobile competition.

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— Robert Clark, contributing editor, special to Light Reading