TPG Telecom says Optus agreement unlikely

TPG Telecom says it’s unlikely it could reach commercially agreeable terms with Optus for a regional roaming or active network sharing deal in the event that the TPG-Telstra tie-up is rejected.

The commentary calls into doubt a ‘plan B’ first couched by the ACCC and then backed as plausible by Optus.

“The ACCC should not assume that, merely because TPG has an incentive to expand its mobile coverage and Optus has an incentive to maximise its revenue, the two parties will strike a deal,” TPG Telecom wrote. [pdf]

“Instead, the ACCC should critically assess the likelihood that Optus will actually offer an arrangement that is commercially beneficial to its competitor, TPG.”

TPG argued Optus’ interests were in maintaining the status quo, and that in any event, Optus would hold the upper hand in any negotiation process.

If an agreement with Telstra is nixed, “Optus will know that TPG has no alternative sharing [or] roaming provider.”

“Therefore, Optus will have every reason to insist on pricing that will be unsustainable for TPG or will undermine TPG’s ability to compete with Optus,” it wrote.

Optus did previously accept “that any arrangement it would negotiate with TPG is likely to be of less benefit to TPG than TPG’s arrangement with Telstra”.

The ACCC is due to make a decision on the Telstra-TPG regional arrangement, which involves spectrum and network sharing, by the end of the year.