“The ACCC has said to TPG ‘build it and they will come,” Dr Higgins told a jammed-packed court room.
“TPG did try to build it, but it was thwarted by community objections, by technical difficulties but ultimately by the federal government’s security guidance.”
The court heard TPG had originally planned to roll out a mobile network using equipment supplied by China state-owned technology group Huawei in 2017.
In early 2019, TPG canned the rollout after the federal government blocked the Chinese group from providing the technology. TPG has long claimed that it could not afford to use equipment from other groups due to cost constraints.
The ACCC blocked the merger deal in May because it concluded that the proposed tie-up between TPG and Vodafone would stop TPG from becoming Australia’s fourth mobile network operator and thus lessen competition in the sector currently dominated by Telstra, Optus and Vodafone.
However, the ACCC found that TPG would have the capacity to roll out a new 4G mobile network in the coming years and therefore allowing the two parties to merge would remove this additional competitor from the market.
Dr Higgins told the court that TPG’s ability to build a 4G network was already outdated with new 5G technology. “5G isn’t just a possibility,” Dr Higgins said. “It’s a product.”
Currently Telstra, Optus and TPG – which owns the iiNet and internode brands – are the three largest players in the broadband market, while Telstra, Optus and Vodafone compete in the mobile network market.
Several executives and experts will give evidence during the case including TPG’s reclusive billionaire executive chairman David Teoh and Vodafone chief executive Iñaki Berroeta.
Mr Berroeta is expected to give evidence later today. Mr Teoh may also give evidence today. The ACCC will be represented in court by Michael Hodge, QC, who shot to prominence last year as one of the counsels assisting the banking royal commission.
Dr Higgins said board papers and emails will show the problems TPG was having with rolling out the network ahead of its plan to scrap it, including an email she said showed Mr Teoh was growing increasingly concerned about problems with the roll out.
Dr Higgins also said that even after TPG’s use of Huawei equipment was ruled out, TPG investigated if it could build similar small-cell networks using equipment from Samsung and Ericsson, however no other providers were able to deliver solutions that were not technologically or financially suitable for TPG.
She also told the court to “keep firmly in mind” that TPG’s situation had changed since it first started rolling out its now scrapped network, particularly that its debt levels had increased significantly.
Earlier in the hearing, lawyer for Vodafone, Peter Bereton QC told the court that the ACCC’s opposition to the merger was incorrect.
“The ACCC’s case is wrong as a matter of comnerce, and wrong as a matter of technology and wrong as a matter of law,” counsel for Vodafone, Peter Bereton SC said.
“The ACCC’s case is chock full of speculation and chock full of possibilities and chock full of theories.”
Mr Bereton said a key problem with the ACCC’s case was its belief TPG would make a new network.
“There isn’t a real chance that TPG will pursue the rollout of a mobile network. There is not a real chance that TPG will become Australia’s fourth network.”
Mr Bereton said the other problem was the ACCC’s view that competition would be lessened.
Mr Bereton told the court the combined Vodafone and TPG entity would be better able to compete against Telstra and Optus in the mobile market as it would be a much larger overall competitor.
“It would rely on a leap of faith by TPG to build this substandard network. That’s a solution that doesn’t presently exist, the technology is not presently there,” Mr Bereton said.
“It’s not possible to know when the technology will emerge or if it will emerge at all.”
Sarah Danckert is a business reporter.