The Australian Competition and Consumer Commission blocked a proposed regional infrastructure sharing agreement between Telstra and TPG Telecom on fears of its long-term impact on prices and coverage, a decision the pair plan to appeal.

In a statement, the regulator’s commissioner Liza Carver outlined although there are some benefits to the floated deal, after assessment it deemed it likely to lead to lower competition and leave consumers worse off “in terms of price and regional coverage”.

Under the plan TPG Telecom will decommission or transfer mobile sites in regional and urban fringe areas to Telstra and give it access to most of its regional spectrum. TPG Telecom will gain access to Telstra’s network on a wholesale basis for a decade.

Among the perceived issues, Carver added that despite Telstra’s assertion additional spectrum would allow it to alleviate congestion in some areas: “It is unlikely that the proposed arrangements would materially improve Telstra’s ability to serve regional Australia.

“Instead, it would likely reduce the incentive for mobile companies to improve their service and coverage in regional areas,” she added.

Concerns were also raised about strengthening Telstra’s existing spectrum position.

In separate stock exchange submissions, both operators indicated they will appeal the regulator’s decision.

Telstra CEO Vicki Brady called the ruling extremely disappointing, pointing to “overwhelming support” for the proposal from customers and community groups.

“This decision is a massive missed opportunity for the people, businesses and communities of regional Australia,” she added.

In its statement, TPG Telecom CEO Inaki Berroeta said: “We are disappointed the ACCC has chosen to ignore the overwhelming evidence submitted from leading economists, competition experts and regional communities outlining the benefits of the proposed arrangement to competition and consumer choice.”

Vocal critic of the proposal Optus welcomed the rejection, stating it was a “win for Australians”.