Tuesday, 29 January 2019 09:29

TPG drops mobile network plan due to Huawei ban Featured


Telecommunications provider TPG Telecom has cancelled plans for rolling out a mobile network, and cited the ban imposed by the Australian Government on Chinese telecommunications equipment provider Huawei Technologies as the main reason.

The company, which announced a merger of equals with Vodafone Hutchison Australia in June last year, had announced a $600 million mobile network in 2017.

In a statement to the ASX, the company said on Tuesday that the government ban on the use of Huawei equipment in 5G networks meant that it could not go ahead with its plans.

TPG chief David Teoh was quoted as saying: "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.

“Over the past two years a huge amount of time and resource has been invested in creating and delivering on a strategy that would have positioned TPG very favourably to exploit the opportunities that the advent of 5G will present.”

The statement said TPG had been looking for a solution to the problem caused by the ban on Huawei, but had concluded that it was not worth spending more money on a network which could not be upgraded to 5G.

TPG has incurred network rollout capital expenditure of approximately $100 million, the statement said. Before August 2018, when the Huawei ban was announced, it had bought equipment for 1500 sites and had fully or partially rolled out just over 900 small cell sites. Additional capital expenditure of approximately $30 million had already been committed.

In April 2017, TPG paid over the top for two lots of 10MHz in the 700MHz spectrum auction, forking out $1.2 billion, and said it planned to roll out a $600 million mobile network.

The statement said that the board had not decided what to do with the spectrum, and would decide later.

TPG said at the time that it would fund the capital expenditure for the network and spectrum payments over the next three years through operating cashflows, existing and new debt facilities.

Teoh said in a statement at the time of the spectrum purchase: "We are uniquely positioned to leverage our success in the Australian fixed-line broadband market to drive the next phase of growth for TPG's shareholders and bring new competition to the Australian mobile market.

"We believe that our mobile strategy will be complementary to our ongoing fixed line business with the ability to bundle mobile and fixed services expected to have a beneficial effect on our already low fixed services customer churn."

The Australian Competition and Consumer Commission has raised some objections to the proposed TPG-Vodafone merger and recently extended the date for giving a final decision.

In a preliminary statement on the merger, the ACCC said on 13 December 2018 that removing TPG, which it viewed as being on the way to becoming a fourth mobile competitor in Australia, from the fray would substantially lessen competition in the sector.

Regarding the merger, Teoh said in Tuesday's statement, "While TPG remains committed to the planned merger with Vodafone Hutchison Australia, the company must continue to make independent business decisions in the best interests of TPG shareholders pending the outcome of the merger process.”

Huawei Australia Corporate Affairs director Jeremy Mitchell said TPG's announcement was disappointing for both Australian consumers and businesses.

"As predicted the Australian Government’s 5G ban on Huawei will lead to reduced competition and higher prices for Australia consumers and businesses. It is not just higher prices, Australians will miss out on the competition that drives technology innovation," he said in a statement.

"This follows Vodafone’s recent comments that network deployment costs are now ‘soaring’ in Australia. Australians will now miss out on cheaper and more affordable mobile services. Australians will also miss out on the world-leading telecommunications innovation that other nations will be deploying.

"Huawei, Australia’s largest provider of wireless technology, has a 15-year track record in this country of delivering safe and secure technology and has always offered and been open to independent security auditing and testing.”

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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