Competition is expected to heat up with significant price wars just around the corner as TPG enters the Australian mobile market with its own network. Consumers should be the big winners.
Telecommunications company TPG is currently one of the biggest players operating in the broadband market and this week, it invested $1.26 billion purchasing spectrum (radio frequencies for communication over the airwaves) from the Government. The purchase of this spectrum allows TPG to setup its own network, which is expected to cost $600 million over three years to build, and will cover 80 per cent of the population.
Investing nearly $2 billion just to get started, TPG expects to have positive earnings once it reaches a six to seven per cent share of the mobile market. This means that TPG will be entering the market with voice and data plans significantly superior to the other telcos, which should result in lower prices or enhanced offerings across all providers. If TPG is able to replicate its success in the home data and broadband market, then the existing mobile providers will have to watch their backs
Since the purchase of telecommunications company Three by Vodafone, the telecommunications market has been controlled by Telstra, Optus and Vodafone. This injection of a new company into the mix will bring prices into line with where they should be and telecommunication companies won’t be able to gouge us for data as they have in the past.
Telstra’s share price has dropped a staggering seven per cent in reaction to the announcement from TPG.
What do you think? Will competition help our currently over-priced mobile marketplace? Will the telco’s gouge us silly between now and the launch of the new TPG network?