TPG kills the rollout of its mobile network

Blames it on the Federal Government's Huawei ban

TPG Telecom has decided to stop the rollout of its mobile network in Australia due to factors "outside TPG control", the company said.

In an announcement to shareholders, the publicly-listed telecommunications provider said that the decision is a result of the Government blocking Huawei from providing 5G equipment in Australia.

TPG explained that its mobile network plans were based on small cell architecture and that the principal equipment vendor selected was Huawei.

The telecommunications provider has so far invested $100 million in the network.

"A key reason for the selection of the vendor and the design of TPG's network was that there was a simple upgrade path to 5G, using Huawei equipment," the company told shareholders on 29 January.

"In light of the Government’s announcement in late August 2018 that it would prohibit the use of Huawei equipment in 5G networks, that upgrade path has now been blocked."

TPG explained that it had continued to roll equipment acquired prior to the announcement form the federal Government but that it has now reached a point in which it need to order more equipment.

"The Company has been exploring if there are any solutions available to address the problem created by the Huawei ban but has reached the conclusion that it does not make commercial sense to invest further shareholder funds (beyond that which is already committed) in a network that cannot be upgraded to 5G," TPG said.

TPG had purchased equipment for 1,500 sites and has fully or partially completed the implementation of just over 900 small cell sites. It has also already committed additional capital expenditure of approximately $30 million.

In August, Huawei took to social media to inform Australian customers that both Huawei and ZTE had been informed of the news by the government.

At the time, Huawei said this was "extremely disappointing result for consumers".

“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" said TPG executive chairman David Teoh.

"Over the past two years a huge amount of time and resource has 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.

“While TPG remains committed to the planned merger with Vodafone Hutchison Australia, the company must continue to make independent business decisions in the best interests of TPG shareholders pending the outcome of the merger process."

TPG said it is not in a position to announce any decision on its future strategy for its current spectrum holdings.

In August, TPG and Vodafone confirmed plans to merge in Australia with the combined entity set to create a $15 billion “challenger” in the market.

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Tags HuaweiTPG

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Samira Sarraf
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