TPG has halted the roll-out of its mobile network, which would’ve become the 4th competitor in the Australian carrier mix.
In an announcement earlier today to the Australian Stock Exchange, TPG said that because it had used Huawei equipment in its build of its carrier network, its plans to build the new network had been derailed.
TPG selected Huawei equipment because it offered a simple path to upgrade to 5G when it was necessary. However, the Federal Government’s ban on Huawei equipment in 5G networks has thrown TPG’s plans out the window:
Since the announcement of its mobile network strategy in April 2017, TPG has been in the process of designing and implementing a mobile network based principally on small cell architecture.
The principal equipment vendor selected for use in the network was Huawei. A key reason for the selection of the vendor and the design of TPG’s network was that there was a simple upgrade path to 5G, using Huawei equipment.
In light of the Government’s announcement in late August 2018 that it would prohibit the use of Huawei equipment in 5G networks, that upgrade path has now been blocked.
Ultimately, in its announcement, the company said it had explored possible solutions to the problem posed, but stated it did not make “commercial sense” to pump any more money into “a network that cannot be upgraded to 5G”.
TPG’s chairman David Teoh had this to say on the announcement:
“It is extremely disappointing that the clear strategy the company had to become a mobile network operator at the forefront of 5G has been undone by factors outside of TPG’s control.”
Huawei Australia also expressed disappointment at the decision:
“As predicted, the Australian’s Government’s 5G ban on Huawei will lead to reduced competition and higher prices for Australia consumers and businesses.”
What does this mean now?
It’s a bit up in the air. TPG holds a substantial amount of 4G spectrum, and the company is also in merger discussions with Vodafone which – for the time being – don’t seem to be favourably viewed by the ACCC.
However, the opposition there was to “removing a fourth mobile network from the market”. If there’s no fourth mobile network anymore – which TPG has seemingly indicated – that opposition may change.
What it means for the consumer is somewhat less obvious. I can only agree with the ACCC’s position – even though today’s announcement changes the landscape a bit – in that not having a 4th carrier network can only mean less competition on price.
No doubt there’ll be further developments here as the ramifications become clear and we’ll keep you posted.