The Telstra Corporation Ltd (ASX: TLS) share price and fellow telco TPG Telecom Ltd (ASX: TPG) have had intraday wobbles after the Australian Competition and Consumer Commission (ACCC) announced it was launching separate court proceedings against the 2 companies, as well as Optus, for allegedly misleading consumers about their NBN speeds.
At the close of trading, shares in Telstra were selling for $3.82 – up 0.53%, and TPG shares were trading at $6.31 – down 0.47%. The Telstra share price was briefly slumped to a $3.79 low early afternoon, and the TPG share price also dropped on the ACCC announcement. The S&P/ASX 200 Index (ASX: XJO), meanwhile, ended the day 0.03% higher.
Let's take a closer look at the news.
Image source: Getty Images
What is the ACCC alleging?
In its statement, the ACCC says the 2 ASX companies and Optus promised home internet speeds of up to 100mbps that they could not deliver on. The telcos promised to test connection speeds once installed and offer alternative plans if the promised rates could not be attained.
The consumer watchdog also alleges Telstra, TPG, and Optus "wrongly accepted payments from certain customers for NBN plans when they were not provided with the promised speeds."
ACCC chair Rod Simms called the alleged behaviour of the 3 telcos "concerning".
"Telstra, Optus and TPG each promised to tell consumers within a specific or reasonable timeframe if the speed they were paying for could not be reached on their connection. They also promised to offer them a cheaper plan with a refund if that was the case," he said.
"Instead, we allege, they failed to do these things, and as a result, many consumers paid more for their NBN plans than they needed to."
He goes on to further allege the telco giants were aware of these issues and had promised to remedy them.
"We are very disappointed that these companies do not seem to have taken seriously the undertakings they gave to the ACCC," Simms said.
Motley Fool Australia contacted Telstra and TPG for comments but none were received before publication.
Telstra has been in trouble over NBN speeds before
In early July, Telstra self-reported to the Australian Communications and Media Authority (ACMA) of the same issue of misleading NBN speeds between 2018 and 2020.
Telstra was forced to refund $25 million to consumers and was threatened with a $10 million penalty if the breach happened again. The Telstra share price actually went up on this day.
TPG also has previously tussled with the ACCC. In 2019, the competition ombudsmen attempted to block TPG's ultimately successful merger with Vodafone Hutchinson.
TPG and Telstra share price snapshot
Over the past 12 months, the TPG share price has decreased 22.5% while the Telstra share price has increased 12.8%. The ASX 200, meanwhile, is 23.4% higher in that time.
Telstra has a market capitalisation of around $45 billion while TPG's is about $12 billion.
