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TPG cancels mobile network, blames Huawei ban

Way back in April of 2017, Aussie telco TPG announced its intentions to take on Telstra, Optus and Vodafone by building its own Australia-wide mobile network. Almost two years later – and less than six months after the news of TPG’s proposed merger with Vodafone – those plans for a new Australian mobile network have been officially scrapped, with TPG confirming that it will cease the project’s rollout.

A press release issued by TPG has indicated that the Federal Government’s 2018 ban on Chinese manufacturer Huawei is the main impetus behind the decision. In August of last year, the Government announced it would no longer allow Huawei to supply 5G equipment to Australian carriers, citing the possibility of “unauthorised access or interference”. The ban was also extended to fellow Chinese tech company ZTE.

Huawei’s 5G tech: banned in Australia

Unfortunately for TPG, Huawei had already been selected as its principal equipment vendor for its mobile network rollout. TPG originally opted to work with Huawei in order to ease the eventual transition from 4G technology to 5G, an area in which Huawei is considered a world leader.

Despite the August ban, TPG continued to utilise equipment it had already procured from Huawei, with plans to roll out the technology at 1,500 sites. However, with the prospect of an upgrade to 5G no longer viable – and over $100 million in capital expenditure already invested in the project – TPG has opted to pull the plug, admitting that the move no longer makes commercial sense.

Australia isn’t the only government concerned with Huawei’s effect on national security. The US Department of Justice indicted Huawei on charges of wire fraud, obstruction of justice and stolen trade secrets, alleging that the company stole intellectual property from American carrier T-Mobile.

No more ‘Big Four’ networks

While unexpected, the news that TPG was set to challenge Australia’s big three networks – and lead to an increase in competition, and an overall better market for consumers – created an initial buzz in the telco sphere. Although TPG’s network was planned to be data-only at launch, the telco had floated possible unlimited data price points of just $9.99 per month, albeit with a daily full-speed cap of 1GB.

For customers in major cities including Sydney, Melbourne, Brisbane and Canberra, TPG’s network may have been a serious alternative to higher-priced plans from Telstra, Optus and Vodafone. While traditional voice coverage wouldn’t be provided at rollout, TPG customers could make calls via Voice over Internet Protocol (VoIP) applications, such as WhatsApp, Skype, or Facebook Messenger, and enjoy unlimited data at reduced speeds with no danger of overage charges.

But with no easy option for a 5G upgrade, TPG is effectively blocked from future-proofing its planned network. TPG’s Executive Chairman, David Teoh, described the decision to shut down the rollout as “extremely disappointing”, but stressed that the announcement will not have any impact on the planned merger between TPG and Vodafone.

TPG-Vodafone merger: still on

The merger – first confirmed in August of last year – will see TPG and Vodafone combine their respective telecommunications services in a $15 billion deal. However, the move is still subject to approval from Australian regulators, most notably the Australian Competition and Consumer Commission (ACCC).

The ACCC is set to announce its decision in April, but has already expressed concerns about the deal. The Commission had apparently been in favour of TPG existing as separate and competitive entity to Vodafone, and felt that a merger between both companies would squash the “aggressive” pricing adopted by TPG in the past.

As TPG currently uses Vodafone’s 3G and 4G networks to offer mobile coverage to its customers, subscribers are unlikely to see an immediate change in their phone plans if the merger does get the go-ahead.

However, the expected launch of 5G in Australia within the next 12 months, combined with the potential Vodafone-TPG team-up, means there’s still plenty of exciting times ahead for Aussie mobile users – even without TPG’s challenger fourth network.

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