Optus backs 'likelihood' of TPG deal if Telstra-TPG tie-up rejected

Optus says a tie-up with TPG Telecom should be considered “at least a real commercial likelihood” if a proposed TPG-Telstra network and spectrum sharing deal is rejected.

The telco has put a large stack of new material from its executives to the ACCC, after the commission had indicated last month that it is still unconvinced at the merits of the proposed Telstra-TPG deal.

The ACCC’s preliminary views last month sought to establish what other options TPG had available to it.

Optus indicated an agreement with TPG should be considered a plausible outcome.

“Optus agrees with the ACCC's view that Optus and TPG are likely to have commercial incentives to enter into such an arrangement, and has provided evidence concerning each party's commercial incentives,” the telco said. [pdf]

“Based on Optus’ evidence … the ACCC should conclude that there is at least a real commercial likelihood of Optus and TPG reaching agreement on such an arrangement in the counterfactual.”

Optus said it “does not consider there to be any technical issues that would prevent an active network sharing arrangement being entered into with TPG.”

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

It said this is “in a sense obvious, given that TPG has preferred a transaction with Telstra”.

But, Optus said, the ACCC’s focus needed to be on the “competitive outcome” of its decisions, “not the relative benefit to TPG”.

“Optus and TPG will continue to face the incentive to compete strongly with Telstra through regional 5G network investments, to the extent it is profitable to make those investments,” Optus argued.

Optus considered TPG’s other options to a deal with Telstra to be less likely.

The ACCC is canvassing whether rejecting the Telstra-TPG deal would encourage TPG to build out its regional network, or lead to a narrower deal being negotiated with Telstra.

These were considered by Optus to be less likely or unlikely propositions.