TPG slams NBN policy

TPG has joined fellow telcos in criticising the government-funded National Broadband Network, particularly for its decision to build over existing fibre networks

Speaking to shareholders at the company’s annual general meeting (pdf), TPG chairman and CEO David Teoh said TPG “has concerns” about the NBN’s increasing involvement in the business market in areas with substantial existing fibre from other carriers.

“We don’t understand why taxpayer funds would be used to overbuild existing infrastructure in these areas,” Teoh said.

It comes after Telstra chairman John Mullen and Vocus CEO Kevin Russell made similar comments, citing concerns of being a monopoly and for having a broken pricing model.

Teoh also expects the NBN rollout will cause margin headwinds for TPG over the next few years, but the company should be “well positioned for growth” once the rollout is completed, citing its lean cost structure.

TPG saw profit headwinds of $76 million in FY19, although EBITDA only slightly declined by $4 million. Teoh said it was “quite a respectable achievement” given the circumstances.

The telco’s corporate business also experienced growth, claiming its service quality has become “increasingly well regarded” in the large corporate and enterprise market, Teoh added. The Singapore business has also been cited as a bright spot, with its outdoor coverage reaching above 99 percent and some 350,000 users onboarded.

“Difficult” year

Teoh also told shareholders the past year was “difficult”, citing the Australian government banning the use of Huawei equipment in 5G networks and the ACCC rejecting its bid to merge with Vodafone.

“A key feature of our innovative mobile network design that we had been rolling out in Australia was its simple upgrade path to 5G using Huawei equipment,” Teoh said.

“With that upgrade path blocked and no suitable alternative technical solution available, it made no commercial sense to continue to invest shareholder funds in a network that could not be upgraded to 5G and we therefore abandoned our Australian mobile network rollout during the year.”

On the rejected merger, Teoh said TPG firmly believes the proposal would “greatly enhance” competition in the Australian telecommunications industry.

“The proceedings [TPG and Vodafone launched to the Federal Court] were heard in September and the court expects to deliver its judgment by February 2020,” Teoh said.

“We remain hopeful that the merger will be permitted to proceed.”