- Analysts say the $9.99 a month unlimited mobile plan is unlikely to continue under the Telecom and Vodafone Hutchison merger.
- They say TPG’s aggressive discounting for new customers in the mobile market is likely to end.
- Also under question is the future of Australia’s fourth mobile network being built by TPG.
The merger of TPG Telecom and Vodafone Hutchison could be the end of the foreshadowed $9.99 unlimited mobile plan and a separate fourth mobile network in Australia.
When TPG announced plans to built its own mobile network, it had plans to offer a $9.99 a month plan, the first six months free, with 1Gbps of high speed data each day, reducing to 1Mbps after that.
Analysts are now questioning whether this will ever happen because the merged entity would be effectively be competing against itself.
Billionaire David Teoh, questioned in an analyst briefing about whether the $9.99 a month plan would continue, said: “Who knows?”
He then speculated that the combined entity could be even more aggressive than that.
IBISWorld Senior Industry Analyst Tommy Wu says it remains to be seen whether the Vodafone and TPG brands will combine or remain separate.
“In order to avoid competition between the two brands, TPG’s aggressive discounting to push for new customers in the mobile market is likely to end, particularly $9.99 unlimited mobile plans.” says Wu.
Boost Mobile Founder and Australian CEO Peter Adderton says the consumer watchdog the ACCC should reject the deal unless the new company offers safeguards to protect virtual network operators.
“It will be brands like Boost Mobile that will be crucial in maintaining a healthy and competitive market,” he says.
“The question is simple: Will the new Voda CEO of the merged entity honour TPG’s previously aggressive six-months-for-free, $9.99 per month offer?
“My guess is they both might get a case of amnesia on this one.”
Before the merger, there were three providers in both mobile and broadband markets, with Telstra and Optus being the major providers.
TPG was the third in fixed line and Vodafone in mobile.
And because of this, IBISWorld says, the operating and competitive landscape of these markets are not projected to change significantly with the merger.
But there are also questions over the future of fourth mobile network from TPG.
Adderton at Boost says it’s worth noting that TPG hasn’t actually yet built a working mobile network.
“As I’ve been saying consistently for some time now, Australia simply couldn’t support four networks,” he says.
“America has 320 million people and carriers are arguing that four carriers can’t survive, so to think it could ever work in Australia with our population wasn’t logical because at some point you’ve got to have a business that can actually make money.
“I don’t believe that TPG ever had the intention to build a full, nationwide network. There’s a huge capital cost to do that and with the amount of money it would take, such an idea was never going to be profitable.
“This was only ever a game of poker. TPG was playing poker, they spooked the market, and Vodafone showed their hand which is exactly what I believe TPG was hoping would happen. Today shows that the mere threat of another competitor was enough for Vodafone to make a move.”
According to IBISWorld, the merger is likely to kill TPG’s planned fourth mobile network.
TPG paid $1.2 billion in acquiring spectrum to build a micro-cell mobile network. However, the feasibility of a fourth mobile network in a small domestic market was unclear.
“The merger will likely help alleviate this concern as TPG combines their fibre network and capacity with Vodafone’s mobile network to capitalise on opportunities presented by 5G services,” says IBISWorld.
The Australian Communications Consumer Action Network (ACCAN), says it’s in favour of increasing competition and improving affordability of telco services for everyday Australians.
“We are concerned that the recently announced merger of TPG and Vodafone will reduce customer choice within the market, with fewer options available for mobile and fixed services providers, as well as an eventual consolidation of products on offer,” says Teresa Corbin, the CEO of ACCAN.
“However, we acknowledge that the new entity of TPG Limited may have greater market power to place pressure on Telstra and Optus to lower their prices, increasing affordability for consumers.
“We hope that the merger will result in greater investment in infrastructure, such as 5G technology, and ultimately increase the availability of reliable, accessible and affordable telco services across Australia.”
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