The Telstra Corporation Ltd (ASX: TLS) share price is edging lower on Friday morning.
At the time of writing, the telco giant's shares are down 0.5% to $3.86.
This follows an update from the Australian Competition and Consumer Commission (ACCC) in relation to the company's proposed regional mobile network arrangement with rival TPG Telecom Ltd (ASX: TPG).
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What is weighing on the Telstra share price?
This morning the ACCC voiced its concerns over the proposed regional mobile network arrangement.
As a reminder, in February Telstra and TPG announced a ten-year regional Multi-Operator Core Network (MOCN) commercial agreement. Telstra advised that the agreement would provide significant value to its wholesale mobile revenues, while providing TPG's subscribers with 4G and 5G services within a defined coverage zone across regional and urban fringe areas.
The ACCC notes that the two parties are asking for authorisation for the deemed acquisition of certain TPG spectrum, which is tied to three interrelated network agreements that are being considered together.
This would see Telstra obtain much of TPG's mobile spectrum in a range of outer-suburban and regional areas, where about 17% of Australians live. Telstra would also obtain 169 of TPG's mobile sites in that area. TPG would then shut down its remaining 556 mobile sites in those areas and acquire mobile network services from Telstra for mobile coverage.
ACCC's statement of issues
The ACCC has set out issues for further consideration and is calling for further views from industry and consumers on how these agreements may impact competition and whether there are public benefits.
ACCC Commissioner, Liza Carver, commented:
Mobile companies compete in terms of the infrastructure and spectrum they have, as the infrastructure and spectrum impacts on coverage and speed which are important to customers. We are assessing how the proposed infrastructure and spectrum arrangements between TPG and Telstra will change the incentives and ability of Telstra, TPG, Optus, and other market participants to compete and to invest in mobile service infrastructure.
There is still a lot of work to do on this complicated and nuanced review, which is of critical importance to competition in the mobile telecommunication sector. At this stage we have not reached any overall conclusions, but welcome further submissions from stakeholders and consumers alike on the issues raised. We are looking extremely closely at all aspects of these agreements, as a decision either way can have significant long term effects.
The ACCC concluded by warning that it can only grant authorisation if it is satisfied that either there is not a likely substantial lessening of competition, or that there is likely to be public benefits that outweigh any public detriments.
A final decision is expected in December.
