For a nearly invisible man, TPG supremo David Teoh has an uncanny ability to shake up Australia's telco market.
Last week's announcement that the company intends to build its own mobile phone network clipped Telstra's share price as investors saw one of its crown jewels, Australia's best mobile network, at risk of profitability corrosion.
But Teoh rarely plays the game just one move ahead, and TPG's drive into mobile infrastructure could trigger some very interesting longer-term outcomes.
There's no doubt Teoh is serious about building a fourth mobile network. His outfit is about to shell out $1.26 billion for rights to the mobile spectrum that makes it possible.
Besides, he long ago recognised that owners of key infrastructure rule the telco roost. For years, industry pundits mused about whether formerly listed superstar iiNet would swallow up TPG or vice versa.
That question was effectively settled the day in 2009 when Teoh announced the acquisition of Pipe Networks, including its extensive metropolitan dark fibre network, for $373 million.
That's the same network it's now using to compete aggressively with NBN and as Teoh said at the time, the transaction positioned TPG as a fully integrated telecommunications company with a broad spectrum of offerings and a major role in Australia's telecommunications industry.
That move provided TPG with its own network, over which it can deliver services without paying a techno-landlord for the privilege of using its infrastructure.
At the same time, it helped bulk up TPG to the point where it could devour iiNet, but iiNet didn't have the teeth or stomach to chew up TPG. And so it played out when TPG absorbed iiNet for $1.56 billion in 2015.
Teoh well knows that an infrastructure play can deliver multiple advantages.
Alternative universes
So much for history. We can't help musing about the future, where a couple of alternative universes might develop. Some have long wondered whether, in the long run, Australia is just too hard a market for Vodafone as a stand alone mobile network operator competing against full service telcos Telstra and Optus.
Maybe it might formalise a strategic alliance with, say, TPG and even license its brand and assets to the company so that TPG effectively acquired a mobile network and Voda rid itself of the headaches of running an Australian operation.
And maybe TPG's latest announcement will bring that vision closer to reality. Eighteen months ago, TPG signed on as a Vodafone Mobile Virtual Network Operator, a kind of upmarket reseller, potentially delivering millions of new customers to Voda's network.
If it's bad news to Telstra that Teoh plans his own mobile offering, it has to be stomach churning for Vodafone. With the 2009 Pipe acquisition, Teoh knew he'd not only bought a fibre network, he'd tipped a domino that eventually delivered iiNet.
Maybe, rather than compete against a rampant TPG, Vodafone will seek a federation with it.
Another play
But there could be another fascinating mobile play. Industry number five Vocus has been in the sharemarket doldrums for months now, for reasons that aren't clear.
Sure, there was some boardroom and management friction in the aftermath of its merger with M2 Group, but that was comprehensively resolved.
Despite the fact that the Vocus deal delivered to M2 exactly the same kind of advantages Pipe Networks afforded TPG – M2 previously had almost everything except its own fibre and Vocus already owned an extensive network – the share price has drifted south since last year. Some good news would surely be welcome.
What if the deal makers at Vocus tapped Vodafone on the shoulder and suggested that Vocus becomes the mobile operator's integrated partner?
The Voda brand would remain intact, it would still make money for its international owner, but free of the burden of actually running the business here. And Vocus would add a mobile network, a very classy one thanks to Vodafone's heavy spending on upgrades in the last few years, to its armoury.
We could have it all wrong. Perhaps Vodafone is content to run its own show in Australia forever and a day. It certainly didn't blink four years ago, when its customer base had slumped due to a poor, patchy network. Whatever it cost to renovate its systems, it wrote the cheque.
But if TPG's own network really is built, and betting against Teoh has rarely been a winning strategy, there must be knock on consequences. Maybe a revamp of Vodafone's Aussie operations will be one of them.
Peter Moon is a technology lawyer with Cooper Mills.peter.moon@coopermills.com.au
