Telstra unmoved by mega-merger
TELSTRA chief Andy Penn says the company is ready to deal with the emergence of a major new rival when TPG Telecom and Vodafone Hutchison Australia join forces.
Speaking after the Federal Court overturned competition concerns around the $15 billion Tpg-vodafone tie-up, Mr Penn said nothing needed to change in Telstra’s so-called T22 transformation strategy.
“We are focusing on executing our strategy,” he said.
“Competition in the industry is already pretty intense and I don’t see this changing that. I fully respect all of my competitors.
“They are very capable and full of very capable people. All we can do is focus on our strategy to continue to lead in the market and our results show that is absolutely working.”
The Australian Competition and Consumer Commission on Thursday lost its bid to block the TPG-VODA-fone merger when the Federal Court ruled it would not substantially lessen competition.
TPG and Vodafone have argued the tie up will give them the scale and firepower they need to take on bigger rivals Telstra and Optus.
Vodafone has a mobile network but does not provide fixed-line internet services, while TPG provides fixed-line internet services but does not operate a mobile network.
TPG had started building a mobile network before striking its deal to merge with Vodafone.
It dumped the venture at the start of last year citing the Government’s ban on Huawei supplying 5G equipment.
The ACCC has argued the merger will result in a more concentrated market and kill off any chance TPG would build a fourth mobile phone network. In dismissing the ACCC’S case, Justice John Middleton ruled more players in a market did not necessarily mean more competition and the ability of a competitor to compete was critical.
Mr Penn declined to comment directly on the arguments made by either the ACCC or Federal Court.
But he noted competition in the telco industry needed to be judged on both prices delivered to consumers and the quality of the networks provided.
Operators needed to be able to make enough money to build and maintain world-leading networks and more players did not guarantee this would happen, Mr Penn said.
Some markets in Europe had up to five operators – providing low prices to consumers – but the flip side was sub-par network coverage and speeds, Mr Penn said.
“Consumer prices are important but you also need to think about the quality of the network,” he said.
“Cumulative investment is what is really needed.”
Mr Penn made the comments as Telstra reported a 7.6 per cent fall in net profit to $1.14 billion for the six months to December compared with the same period a year earlier.
Revenue and other income fell 2.8 per cent to $13.4 billion.
Mobile revenue was flat at $5.31 billion despite Telstra adding 137,000 retail postpaid mobile services and 135,000 retail prepaid services. Fixed revenue dropped 10.9 per cent to $2.39 billion as Telstra lost business to companies operating on the National Broadband Network and other players in the market.
Telstra reduced its underlying fixed costs by $422 million in the halfyear, taking its total underlying fixed cost reductions to $1.6 billion a year since 2015-16.