• A spat over mobile service coverage claims,  involving TPG and Telstra, has shone a spotlight on the Australian comms services sector
• TPG (aka Vodafone Australia) claims Telstra has been “misleading” the public about the extent of its mobile network reach, an accusation Telstra has refuted
• The war of words comes as an industry report suggests the country’s three main telcos will be scrapping over slim pickings in the coming years

Australians are not known for keeping their views a secret, so a public announcement from one of the country’s three main telcos, TPG Telecom (aka Vodafone Australia), claiming that key rival Telstra appears to have been “misleading” the public about the extent of its mobile network coverage, might have raised eyebrows in other countries if not on home turf.  

“Vodafone [TPG] has called for a regulatory investigation into Telstra’s mobile coverage claims after discovering the telco appears to have been misleading Australians for more than a decade,” TPG noted in this announcement. “Vodafone alleges Telstra has engaged in misleading or deceptive conduct for over 15 years by dramatically overstating the geographic reach of its mobile network by as much as 40% and has been using these inflated coverage claims to make unfair comparisons against other mobile operators’ network coverage,” it continued. 

“Analysis of network maps provided for the ACCC’s [Australian Competition and Consumer Commission’s] 2024 Mobile Infrastructure Report appear to show that Telstra has been making claims about its network coverage based on signal strength that can only be obtained with the use of a special external antenna and powered repeater usually installed on a building or vehicle, and must be purchased at significant additional cost,” added TPG. 

Telstra, which claims it can offer mobile services to 99.7% of Australia’s population (27 million), responded with this announcement to note that using its coverage maps, “anyone has always been able to determine our level of coverage with and without an external antenna, so it’s always been clear what to expect based on the device they’re using. Our competitors do not offer the public the same ability using their coverage maps… No matter how you look at it, Telstra’s mobile network covers more of Australia than any other.” 

However, it also added: “Now that Vodafone has communicated how it’s chosen to calculate its coverage footprint for the first time, to help the public understand the difference, we’ve highlighted that our 3 million square kilometres of coverage is based on using an external antenna… Whether you use an antenna or not, Telstra’s network is at least 1 million square kilometres larger than Vodafone’s,” it added. 

TPG Telecom, which offers its services under a broad range of brands (Vodafone, TPG, iiNet, AAPT, Internode and Lebara), is one of Australia’s three major telcos, as a result of the 2020 merger of TPG and Vodafone Hutchison Australia. It ended 2024 with 5.51 million mobile customers – you can find out more about TPG in this recent TelecomTV article.     

Telstra ended 2024 with just over 12 million mobile customers (excluding wholesale agreements) while Optus had about 8.5 million. Between them, the three main service providers command about 88% of the mobile market, according to the ACCC.  

Competition is tough in what is a limited market in terms of total customer numbers and there’s little room for growth, as the recent Australia Telecoms Industry Report 2025-2032 from Idem Est Research and Advisory, headquartered in Sydney and specialising in the telecoms market across the Asia Pacific market, points out. 

Challenging economic conditions

The Australian economy has been in the doldrums for quite some time and despite the unexpected return to power of the Labor Party after its remarkable and historic landslide win in the recent general election, economic pickup has not been instantaneous. That’s hardly surprising given that the Lucky Country has been badly buffeted by the less-than-balmy breezes that been blasted across the Pacific Ocean as part of the fallout from the increasingly strained relationship between the US and China – and that problem has been compounded by US President Donald Trump’s erratic imposition of swingeing tariffs, which are having a massive effect on global trade.

Congratulating Labor on winning a second term, the Australian Industry Group, a major employer’s association representing a wide range of sectors including telecom and IT, warned that the new government and the Australian economy faces “the toughest time in a generation to be a business… each day sees more global trade disruption, greater market intervention, the building of trade barriers and the risk of global conflict. As a trade-expressed economy, we will not be immune to the consequences of the rapidly changing global landscape.” 

Against this gloomy background, Idem Est’s report concludes that the total Australian telco market will grow by an average annual rate of just 1.4% between now and the end of 2032 to reach a value of US$29bn.

That’s a pretty low rate of growth, although the report calls it ‘moderate’ in the face of the “significant economic and inflation headwinds facing the country.” The expectation overall is that the Australian telecom industry will remain “steady” by virtue of its “defensive nature”. The report shows that investments in the telecom sector “bottomed out” in 2021 and it is expected that service providers will “maintain growth momentum” at an average rate of 0.86% by 2032. It’s not much but it’s better than nothing given current circumstances.

 In the mobile sector, operators face limited competitive pressure after the market shifted to an unlimited voice, text and data allowance as just about the only offering differentiator between them. Furthermore, operators are now following the example of UK (and other) mobile companies and indexing their customer contracts to the rate of inflation, a strategy that allows them to increase costs mid-contact but one that is despised by subscribers. In terms of generations of technology, the report says subscribers to 5G and 6G (whatever that might be) are set to account for 90% of all mobile subscribers by 2032.

 It also concludes that the number of fixed line broadband subscribers will continue to grow organically as the population continues to rise and the number of previously underserved or unconnected premises at last get broadband connectivity and internet access via the wholesale national broadband network (NBN). Designed to replace Australia’s aging and partial copper lines, the NBN has progressively been rolled out across the huge country using fibre lines and hybrid fibre coaxial cable, as well as fixed wireless access and satellite connectivity. The NBN provides wholesale access to internet service providers (ISPs), which then offer internet plans to their customers. 

Interestingly, the Idem Est research forecasts that by 2032 Elon Musk’s Starlink satellite constellation and service will, by then, be edging out the NBN to become the largest regional player in Australia. 

For example, the report shows that based on the current rate of adoption of its fibre-to-the-premises (FTTP) offer, it will take the NBN some 20 years just to upgrade its existing FTTN (node) and FTTC (curb/cabinet) subscribers. This reality throws into stark relief that the on-demand fibre upgrade programme “requires an overhaul shift to a systematic upgrade of premises providing scale and reduced unit costs, as many FTTP programmes have shown around the world. 

Meanwhile, Telstra’s share of available revenue has been falling and its earnings before interest, taxes, depreciation and amortisation (EBITDA) share is declining even faster as its dominance in the fixed line market has suffered due to the migration of customers onto the NBN. The report also indicates that sector growth is subdued by average revenue per user (ARPU) pressure compounded by margin pressure in the fixed broadband market. This continuing reality is forcing telcos to seek outside opportunities to increase their scale.

Thus, the Idem Est research reports that a further wave of consolidation in Australia is likely as margins get squeezed even further. Smaller ISPs that use the NBN network resellers will struggle to compete and will most likely be acquired by larger operators. Meanwhile, some market players outside the telco market are seeking growth by exploring ways to increase their scope of products and services offerings.

The report also shows that telco capital expenditure (capex) is in decline from the all-time high the industry achieved in 2017 and 2018 when investment into Australia’s massive and government-owned NBN was at its peak. 

The expectation is that telco capex will continue to rise, albeit at more modest levels than was experienced over 2017 and 2018, as investment will be required to meet the seemingly insatiable demand for more and more data bandwidth to provide for further expansion of mobile coverage and the capacity improvements that will go hand in hand with it.

In short, tough times will continue for several years yet and the Australian telecom sector may well look very different by 2032.

– Martyn Warwick, Editor in Chief, TelecomTV