The Australian Competition and Consumer Commission has launched its fourth inquiry into regional mobile access, according to a research note circulated by Macquarie.
The ACCC opened the review without identifying a discrete trigger event, but noted that domestic roaming has continued to be a policy concern. The commission's last review, completed in 2017, concluded that imposing regulation would not be in the long-term interests of end users.
Macquarie's note says the regulator has decided to revisit the issue because the market has changed since 2017. The research brief lists the proposed UOMO framework, advances in direct-to-device satellite technology, and the Optus-TPG mobile operator core network agreement as developments prompting renewed scrutiny.
Under a regime of mandated access, Macquarie argues, Telstra's regional network advantage could be reduced while the coverage and competitive position of TPG Telecom and other access-seekers could improve. Given Telstra's larger regional footprint, the bank expects Telstra would most often act as the primary access provider, though Macquarie notes that access arrangements may be reciprocal in locations where competing operators hold local strengths.
The research note highlights coverage as a central component of brand strength in Australia. It warns that regulated access could erode Telstra's competitive edge on that front. Macquarie also says Telstra is likely to counter that mandating access would dampen incentives to invest and could fail to deliver consumer benefits over time.
Macquarie points out that Optus opposed regulated roaming during the prior inquiry, but says Optus' present position is uncertain following its core network agreement with TPG, an arrangement that has already narrowed some differences in regional network reach.
The ACCC expects the inquiry to take roughly 12 months. During that period the regulator will consult industry participants and regional communities before reaching a decision on whether to impose regulation.
Macquarie has left its ratings unchanged: a neutral rating on Telstra and an outperform rating on TPG Telecom. Market snippets included in the research note showed Telstra trading down about 1.57% and TPG up about 0.28% at the time the note was issued.
Summary
- The ACCC has opened a fourth review of regional mobile access, with industry consultation expected to run for approximately 12 months.
- Macquarie maintained a neutral rating on Telstra and an outperform rating on TPG Telecom, flagging divergent impacts from potential mandated access.
Key points
- Regulatory reopening is driven by market shifts including the proposed UOMO framework, direct-to-device satellite developments, and the Optus-TPG core network agreement - sectors impacted: telecommunications infrastructure and mobile services.
- Mandated access could reduce Telstra's regional network advantage while strengthening coverage and competition for TPG and other operators - market impact: competitive dynamics and investor assessments of network operators.
- The ACCC will consult industry stakeholders and regional communities, with a decision process expected to take about a year - impact on regulatory and regional policy planning.
Risks and uncertainties
- Potential weakening of Telstra's competitive position if regulated access is imposed - risk to telecommunications incumbents and related investor valuations.
- Telstra's likely argument that regulation would reduce investment incentives and may not benefit consumers over time - uncertainty for future network investment decisions.
- Optus' current stance is unclear following its core network agreement with TPG, creating ambiguity around industry responses to regulation - risk for competitive strategy among mobile operators.