Mobile market 'rife and intense' amid TPG-Vodafone merger fight: Optus boss

Singtel Optus chief executive Allen Lew has expressed doubts that TPG Telecom will resume plans to attack the mobile market after the competition regulator last week blocked the David Teoh-led operator's $15 billion merger with Vodafone Hutchison Australia.

But Mr Lew said competition in the mobile market remains "rife and intense" and attempting to take the major providers head-on by building a new network was not the "best approach".

Optus chief executive Allen Lew. Picture: Jamila Toderas

Optus chief executive Allen Lew. Picture: Jamila Toderas

The Australian Competition and Consumer Commission blocked a $15 billion proposed merger of fixed-line provider TPG Telecom with mobile network operator Vodafone Hutchison Australia last week, upsetting investors and many in the business community.

One of the reasons the competition regulator is standing in the way of the deal is a belief TPG will continue rolling out its own mobile network, despite the telco saying the government's ban on Huawei for super-fast 5G mobile infrastructure has meant any further investment in a fourth competitor is not financially feasible.

Some analysts and TPG believe the decision is, in fact, a positive for rivals Telstra and Optus as it weakens a competitor in the race towards 5G. TPG and Vodafone will appeal the decision in the Federal Court.

Mr Lew said there were pros and cons for Optus whether the merger went ahead or not. But he said Optus has a "very clear position in the market" focused on providing exclusive sports and family-friendly content, value-conscious plans and "exceptional service".

"If we do these three things, we will insulate ourselves if the merger doesn't go through and we have a fourth mobile network in the market," he said.

He was sceptical a fourth network could compete directly with the three current telecommunications companies providing the service saying TPG would would have to be "very clever and astute".

"For a new network to be built [it's costly and] is going to need to get a return," he said. "Just providing a simple product that competes [with the existing networks] may not necessarily be the best approach."

TPG's decision to publicly cancel plans to roll out the network in January had yet to dampen competition, he said, with price-sensitive customers still largely served by mobile virtual network operators (companies that sell services running over mobile networks they don't own).

"I haven't seen any cooling down in competition in 2019. Competition will remain rife and intense," he said.

Over the year to March, Optus' operating revenue increased 6 per cent to $9.1 billion, with 379,000 new postpaid mobile subscribers and 137,000 broadband customers.

Net profit for the year was down 15.8 per cent to $659 million compared to 2018. One of the drags on Optus' result was a delay in the NBN's roll out for homes connecting to the network using pay-TV cables, and higher depreciation and amortisation costs.

Singtel Group chief executive Chua Sock Koong said on the company's earnings call that both of their core markets - Singapore and Australia - were "preparing for a potential operator" and the price competition had already happened before the rival telco launched services.

She said the ACCC decision meant a fourth Australian network "may still happen".

"Both markets have seen fairly intense mobile competition," she said.

Mr Lew said competition was "something we accept" in terms of a fourth mobile entrant.

"Bear in mind people are so dependent on their mobile ... for a whole lot of other lifestyle functions [than just calls]," he said.

"From our perspective we will continue to pursue our strategy ... in terms of our content. That has served us well over the last few years. I am sure it will continue to serve us well even in an era of intense competition," he said.

  • SMH/The Age
This story Mobile market 'rife and intense' amid TPG-Vodafone merger fight: Optus boss first appeared on The Sydney Morning Herald.