TPG kills mobile plans blaming Huawei Aussie ban

Australian telco TPG has abandoned plans to create a fourth mobile offering after the government order blacklisting Huawei, its main supplier, from the country.

The last couple of months have seemingly been a series of headaches and large financial outlays for the telco. It has been attempting to improve connectivity for the people of Australia through a very expensive network deployment, but then the Australian government decides to kick it in the stones by banning its supplier and poo-pooing a merger which would help create financial synergies to ease said deployment.

According to the Guardian, enough is enough and the TPG management team have given up. No-one gets a fourth mobile player now.

“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,” said David Teoh, Executive Chairman of TPG.

Perhaps there is a bit of poetic justice here. The Australian government has been poking and prodding the industry in recent months, proving to be one of the most intrusive of political administrations in the ‘Western’ world, but with TPG ditching the mobile network the Aussie governments ambition to create more competition has come crashing down around it.

Having already spent $1.26 billion for mobile spectrum during the 2017 auction, the total bill for the network was set to exceed $2 billion. TPG had opted to use Huawei as its main vendor for the project, though the ban from the Australian government on the Chinese company participating in the connectivity euphoria effectively ended this ambition. Now it seems TPG has just had enough, throwing in the mobile connectivity towel altogether.

On the bright side for TPG, this move effectively kills off 50% of the Australian Competition and Consumer Commission (ACCC) objections to the Vodafone merger.

Although the merger between TPG and Vodafone has been rounding the offices for approval for some time now, the ACCC recently extended its own deadline to investigate the matter further. The Aussies were desperate for a fourth national mobile operator and with TPG’s potential disruptive offer, its prayers had been answered. Then rumours of a merger started.

In extending the deadline to either approve or deny the merger application, you get the impression the ACCC is buying itself time to justify a pre-determined position. We suspect it wants to say no and create a position of four operators but hasn’t got enough material to do so.

That said, without a TPG mobile network the ACCC can only object to a removal of competition in the fixed line segment. We can imagine Vodafone would be happy to ditch its own fixed network ambitions if it means a greenlight for the merger.

In one swift movement the Australian government has lost its fourth mobile network operator while the competition watchdog might have lost any ammunition it had for denying the TPG/Vodafone merger. Not the greatest day for the Aussies.