The federal government's decision to ban the use of Chinese telco Huawei in Australian 5G networks has led to TPG scrapping its plans for a new mobile network.
TPG, which had been designing and implementing its mobile network since April 2017, decided to cease the rollout of its infrastructure project today after investing significant sums so far.
The decision to stop work on the rollout was not taken lightly by the company, but TPG says it was necessary to act in the best interests of shareholders.
TPG paid $1.26 billion for its mobile spectrum in 2017 and has already spent $100 million of the $600 million construction cost.
The telco had already opted to use Huawei equipment in its build before the federal government banned the Chinese tech for 5G networks due to security concerns.
TPG says the key reason it selected Huawei was because there was a simple upgrade path to 5G, but it does not make commercial sense to invest further shareholder funds in a network that cannot be upgraded to 5G.
TPG executive chairman David Teoh says it is beyond disappointing to have to cancel the project that was already in progress.
"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," says 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."
TPG's network was to be Australia's fourth mobile network after Telstra, Optus and Vodafone.
The company, in conjunction with Vodafone, spent $263 million on 5G spectrum at auction last month and has committed to spending another $30 million on construction.
TPG's merger with Vodafone is not in jeopardy because of this development, but the two still need to overcome approval by the competition watchdog.
The US has also recently placed restrictions on Huawei tech, and on Monday criminally charged the Chinese company with stealing trade secrets, defrauding banks and obstructing justice.
At 10:30 AEDT TPG shares were up 1.72 per cent at $7.08.
Business News Australia
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