ACCC seeks further views on Telstra and TPG mobile network deal

Australia’s ACCC has requested more information before approving the mobile network agreement between Telstra and TPG.
Telstra is Australia’s largest mobile network operator, while TPG is Australia’s third largest mobile operator after Optus. Telstra operates over 11,000 mobile base stations while TPG operates over 5,600. Telstra’s network has 99.5% population coverage, while Optus has 98.5% and TPG has over 96% respectively.

Telstra and TPG have ACCC approval for the acquisition of certain frequencies from TPG, which is tied to three interrelated network agreements that are being considered together.

Telstra would get much of TPG’s mobile spectrum in a range of suburban and regional areas, where around 17% of Australians live. Telstra would also get 169 mobile sites from TPG in this area.

TPG would then close its remaining 556 mobile sites in these areas and purchase Telstra’s mobile network services for mobile coverage.

“We assess how the proposed infrastructure and spectrum agreements between TPG and Telstra will alter the incentives and ability of Telstra, TPG, Optus and other market players to compete and invest in mobile services infrastructure” , ACCC Commissioner Liza Carver said in issuing a statement of preliminary views.

“There is still a lot of work to be done on this complicated and nuanced review, which is of crucial importance for competition in the mobile telecommunications sector. At this stage, we have not drawn general conclusions.

The ACCC will announce the final decision on the deal between Telstra and TPG in early December.

THE COMPLICATED CASE

Telstra and TPG have entered into three interdependent agreements regarding a Multi-Carrier Core Network (MOCN) commercial agreement: an MOCN service agreement, a spectrum authorization agreement and a mobile site transition agreement.

Under the agreement, TPG licenses Telstra to use the spectrum it currently owns, and Telstra provides network services to TPG through active sharing of mobile network infrastructure in certain regional and urban edge areas ( regional coverage area), which comprise approximately 17 per cent of Australia’s population coverage.

TPG would use MOCN services provided by Telstra to offer 4G and 5G retail and wholesale services in the regional coverage area. TPG would transfer up to 169 of its existing mobile sites in the regional coverage area to Telstra and aims to decommission the rest. The initial term of the MOCN service agreement is 10 years and TPG has two options to extend the agreement for 5 years.

TPG and Telstra will continue to operate their own networks in metropolitan areas where approximately 81.4% of Australia’s population resides. TPG and Telstra will also continue to operate their own mobile core networks (inside and outside the regional coverage area).

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