ELEANOR HALL, PRESENTER: Well, as global tensions with Huawei rise, back in Australia, TPG Telecom has announced today that it will stop its mobile rollout in Australia.
TPG had selected Huawei to upgrade its current network to 5G, but last year’s Australian Government decision to ban the use of Huawei equipment has stopped that.
With more I’m joined by senior business correspondent Peter Ryan.
Peter, how has TPG explained this decision to withdraw its 5G rollout altogether?
PETER RYAN: Well, Eleanor the ban on the use of Huawei equipment for Australia’s 5G network announced last year has really left TPG with a two billion dollar headache.
The telco had paid $1.2 billion for the mobile spectrum in 2017, had already spent $100 million out of a planned $600 million to build the mobile network
Now this was supposed to be the fourth mobile network for 5G after Telstra, Optus and Vodafone – but in a statement TPG said, despite exploring solutions to address the Huawei ban, the rollout has been undone by factors out of its control, namely security concerns that prompted the government’s ban.
Now not surprisingly, Huawei’s head of corporate affairs Jeremy Mitchell told me TPG’s decision is disappointing and that customers will end up paying more given the reduced competition.
JEREMY MITCHELL: We predicted this that when the Australian Government had a ban on Chinese firms like Huawei doing 5G, it would produce competition and mean higher prices.
Between 20 and 30 per cent more for operators to rollout their networks because of the lack of competition.
And that is going to be put through to the consumers.
PETER RYAN: When I spoke to your chairman, John Lorde late last year, he said that he’d had no discussions or meetings with the government since that decision to ban Huawei from the 5G network — have you had any success in knocking on doors in Canberra?
JEREMY MITCHELL: Look, we haven’t — the government hasn’t been coming towards us in any way about 5G other than the original announcement that was made last year. But again we’re always willing and happy to sit down, talk about our technology, put in place anything, any requirements as far as auditing, testing, independent testing —
We are very confident and know that we give world-leading technology that is safe and secure. We’ve been doing it for 15 years in Australia without any problems, we have a proven track record.
ELEANOR HALL: That’s the Huawei head of corporate affairs Jeremy Mitchell.
But there’s another side to this story Peter, with the Huawei ban possibly working in TPG’s favour, tell us about that.
PETER RYAN: Well TPG is currently in talks to merge with one of its competitors, Vodafone – which already has a nationwide network.
That marriage is currently being reviewed by the competition regulator the ACCC, which might take a dim view of this weakened competition.
So in a merged entity, you wouldn’t need two identical mobile networks and telco analyst Paul Budde says for TPG, the Government’s ban on Huawei might be an easy way out.
PAUL BUDDE: Yeah, I really think you know that, it’s a convenient situation. Yes obviously, the fact that Huawei can’t compete in the Australian markets, you know the company roughly offers a 30 per cent discount on equipment.
So, taking Huawei out of the equation, you know is a major setback. Not just for TPG but for the whole telecommunications market and obviously if TPG wouldn’t do anything, I think the ACCC will simply not allow the merger to happen.
ELEANOR HALL: Telco analyst Paul Budde. Now Peter we’ll be hearing more about the broader Australian economy shortly but you’ve been looking closely at a closely watched survey this morning.
PETER RYAN: Yes, so this is the National Australia Bank’s business survey. It shows business conditions “fell sharply” last December.
The last six months of 2018 showed a “significant slowing” across trading, profitability and employment, particularly weak in the retail sector.
This all goes to growing evidence that fallout from the housing correction means, some consumers are cutting back as they see their perceived wealth deteriorate.
ELEANOR HALL: Peter Ryan, our senior business correspondent. Thank you.