Australian fixed line operator TPG Telecom stopped deployment of a mobile network due to a government ban on Huawei, its principal equipment vendor.
The operator said in a statement a key reason for selecting Huawei and the design of the network was the simple upgrade path to 5G.
In August 2018 the government effectively banned China-based equipment vendors from participating in the country’s rollout of 5G infrastructure due to national security concerns.
TPG Telecom said the restriction blocks the upgrade path to 5G, noting it explored other solutions to address the problem created by the Huawei ban but concluded it does not make commercial sense to invest further in a network that cannot be upgraded.
The operator has been designing and building out its mobile network across the country since acquiring spectrum in December 2017.
TPG Telecom executive chairman David Teoh said: “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. 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.”
The company spent about AUD100 million ($71.8 million) on capex, purchasing equipment for 1,500 sites before the government’s ban was announced. It also fully or partially completed the installation of just over 900 small cell sites.
Teoh said while TPG Telecom remains committed to a planned merger with Vodafone Hutchison Australia, it “must continue to make independent business decisions in the best interests of TPG shareholders pending the outcome of the merger process”.
The operator does not expect any impact from the decision on its fiscal 2019 guidance and does not currently expect to write-down mobile network costs to-date.