TPG Telecom executive chairman David Teoh says forcing rival telecommunication giants to share their mobile networks with competitors would help break the sector’s “monopolistic culture” – and boost TPG’s fight for a slice of the $8 billion mobile market.
The Australian Competition and Consumer Commission is due to rule on “declaring” a domestic wholesale mobile roaming service by the end of April. A declaration which would force each mobile carrier to share its network with competitors for a fee, which would be determined by the competition regulator.
“Roaming is extremely important to us,” Mr Teoh told The Australian Financial Review.
“It does help a lot on the customer side, to get the benefit, to get the competition.”
Last week, TPG announced its arrival into Australia’s mobile market, paying $1.26 billion for an 11-year licence to use 2×10 megahertz of 700 MHz mobile spectrum.
TPG will spend an additional $600 million over three years building its new mobile network, which is expected to cover 80 per cent of the Australian population. A declaration on domestic roaming would greatly benefit TPG because, for a fee, it would have the same network reach as major rivals.
“We’ve committed to a lot of money to set up the mobile infrastructure and I believe that will help a lot of consumers in the market place,” Mr Teoh said.
Asked whether TPG’s move into the mobile market will influence the ACCC’s decision on roaming, Mr Teoh answered diplomatically.
“I think the ACCC have their process to look into all of that. But, it is extremely on our side, I think, to offer better value to all Australians rather than the metro areas,” Mr Teoh said.
“If you look at the monopolistic type of power, it’s very concerning for the industry. It is important that we can break that type of monopolistic culture, I think roaming would help tremendously.”
Vodafone Hutchison Australia has been the primary agitator in pushing for the ACCC to declare domestic roaming and has been publicly trading blows with Telstra, which stands to lose the most if it becomes a reality.
Telstra shares have plunged 8.8 per cent since TPG announced its push into the mobile market last week and the telco has been one of the worst-performing stocks on the Australian Securities Exchange this year.
Commenting on last week’s spectrum auction a Telstra spokesman said: “These investments in spectrum show Australia has a strong and competitive mobile market under the current regulatory settings and reinforce why there is absolutely no case for regulated roaming.”
If the ACCC declared domestic roaming it would take away Telstra’s biggest advantage, the size and reach of its network, and would be forced to compete more on price – it charges a premium for having the largest network – something made all the more complicated by TPG’s entry into the mobile market and could further hurt profits.
Mr Teoh has made it a habit of disrupting the telco market as a low-cost and highly-competitive operator. TPG’s move into the mobile market will surely spark a price war and pressure the profits of incumbents Telstra, Optus and Vodafone Hutchison Australia.
“We have been very successful in our business for a long time. We can replicate our success to the mobile side. We want to give value to the consumer and I believe we can do the job,” Mr Teoh said.
Mr Teoh said there is plenty of opportunity for TPG to capitalise on Australia’s $8 billion mobile market, which will continue to grow as consumers connect more devices.
“The market is very big. We are a very good company with a lot of good people with good team work,” he said.
“We’re very efficient, our cost structure is low and also with all our infrastructure, systems and call centres in place, so the cost to set up the mobile network is much cheaper than probably other people, so we can do it better, more efficiently.”
Mr Teoh also flagged TPG will likely be going after more spectrum as 5G, which is expected to offer much faster speeds and could ultimately impact the profits achieved by the national broadband network, as the telco builds its mobile capabilities in the future.
“That will be down the road. Down the road, 5G is here, the spectrum band will be announced later, but we’re very keen on the 5G space, so definitely we want to participate in that,” he said.
“There are massive advancements in technology on 5G. The progress in that area in the next few years will be tremendous and when you go to 5G, people talk about gigabit, tens of gigabits. There will be massive changes.”