TPG Scraps Plan to Start a Mobile Network in Australia

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TPG Telecom Ltd. scrapped plans to roll out a mobile network in Australia, citing the government’s decision to bar the use of Huawei Technologies Co. equipment in next-generation wireless networks.

  • TPG, which had chosen the Chinese telecommunications giant as its principal equipment vendor before the government’s ban, said in a statement Tuesday that it “does not make commercial sense” to now move forward with the new network.

Key Insights

  • Abandoning the rollout of its own mobile network potentially removes a key objection from the competition regulator to TPG’s proposed merger with Vodafone Hutchison Australia Pty.
  • The announcement is among the first signs the government’s ban on Huawei is impacting the telecommunications industry in Australia. China has attacked the move, saying it limits competition for Chinese companies in Australia, while Huawei has repeatedly insisted the use of its equipment wouldn’t compromise national security

Market Reaction

  • TPG Telecom shares have swung between gains and losses since the open, rising as much as 5.6 percent and declining as much as 1.6 percent. The stock was little changed at A$6.94 as of 10:34 a.m. Sydney time
  • Telstra Corp., Australia’s largest mobile phone network operator, rose as much as 4.2 percent in early Sydney trading

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