TPG has binned its proposal to build the fourth 4G network in Australia blaming the federal government’s Huawei ban.
Huawei was the principal equipment vendor selected for use in the network. TPG said a key reason for choosing the Chinese company and designing its network was “there was a simple upgrade path to 5G, using Huawei equipment”.
Huawei was banned by the federal government from taking part in the 5G rollout last August due to national security concerns.
TPG said it has been searching for other solutions but says “it does not make commercial sense to invest further shareholder funds in a network that cannot be upgraded to 5G.”
The company has been working on the 4G network since April 2017.
David Teoh, executive chairman at TPG said, “It is extremely disappointing that the clear strategy the company had to become a mobile network operator at the forefront of 5G has been undone by factors outside of TPG’s control.
“Over the past two years a huge amount of time and resource have been invested in creating and delivering on a strategy that would have positioned TPG very favourably to exploit the opportunities that the advent of 5G will present.”
TPG has spent close to $100 million since the rollout of the network.
Prior to August 2018, it had purchased equipment for 1500 sites and has fully or partially completed the implementation of just over 900 small cell sites.
The company said additional capital expenditure of $30 million is already committed.
Teoh said the company is committed to the upcoming merger with Vodafone but must make decisions in the best interests of TPG shareholders pending the outcome of the merger process.
Last August, TPG and Vodafone announced a $15 billion merger with the newly merged entity to be named TPG Telecom despite Vodafone owning the majority stake of 50.1 per cent.
However, the ACCC expressed its concern months later over the merger citing it could result in a substantial lessening of competition.
This was due to TPG creating its own mobile network while Vodafone already owns and operates its own mobile network and has started supplying fixed broadband services on the National Broadband Network (NBN).
At the time, Rod Sims chair at the ACCC said TPG is on track to become the fourth mobile network operator in Australia and will likely be an aggressive competitor.
The ACCC will post its decision about the merger on April 11, a delayed date after both companies were late with supplying information to the consumer watchdog.