The Australian Competition Tribunal backed a competition watchdog decision to block a proposed regional infrastructure sharing arrangement between Telstra and TPG Telecom, noting it wasn’t convinced the deal wouldn’t substantially lower competition.

In a statement, the tribunal argued it wasn’t satisfied the likely benefit to the public from the sharing agreement would outweigh the detriment.

It explained the proposed asset transfer deal would give Telstra substantial benefits and increase its market strength in the retail and wholesale mobile markets, undermining rival Optus’ incentives to invest in 5G technology.

“Over time, this would weaken the competitive constraint on Telstra, and lead to increased prices and margins.”

In separate stock market filings, Telstra and TPG Telecom said they will review the decision before taking further action.

TPG Telecom CEO Inaki Berroeta stated its options for further appeal include a judicial review in federal court, complaining the decision “entrenches the status quo for mobile coverage in regional Australia”.

He explained a proposed spectrum authorisation agreement would have allowed it to use about 3,700 additional regional mobile sites, increasing the number of sites by around five times.

Telstra CEO Vicki Brady said the “outcome was disappointing”, adding it is also calling for “a rethink of policy on spectrum access in light of the ever-increasing demand for mobile data”.

Optus CEO Kelly Bayer Rosmarin said the ruling is good for regional communities as they will continue to benefit from competition as it “reaffirms its commitment” to providing the areas with a strong network.

The Australian Competition and Consumer Commission rejected the planned infrastructure sharing agreement on fears it could reduce competition and have a negative impact on prices and coverage.