The Telstra Corporation Ltd (ASX: TLS) deal with competitor TPG Telecom Ltd (ASX: TPG) could face scrutiny from the Australian Competition and Consumer Commission (ACCC).
The Telstra share price fell 1.74% today, while the TPG share price slid 2.73%. However, the S&P/ASX 200 Index (ASX: XJO) took a greater hit, dropping by 2.99%.
Let's take a look at what is happening at Telstra and TPG.
Telstra and TPG deal may hit a barrier
Rod Sims, the outgoing boss of the ACCC, has revealed the competition authority will be "looking very closely" at a new deal between telco giants Telstra and TPG.
Telstra and TPG have signed a ten-year regional multi-operator core network commercial agreement, as my Foolish colleague James reported on Monday.
As part of the deal, Telstra will gain access to TPG's spectrum on the 4G and 5G network, while TPG will benefit from access to 3,700 of Telstra's mobile network assets.
However, this agreement, which TPG described as a "game-changer" in its financial results today, requires ACCC approval.
And the ACCC's Sims told the Sydney Morning Herald (SMH) his team had yet to look at the deal in detail but was concerned it could impact mobile price plans. Mr Sims, who has been one of the most vocal critics of the 2020 merger between TPG and Vodafone, said:
Post merger — despite what the parties say — it is a fact that post merger prices have gone up. Prepaid and postpaid prices have gone up, so that is as a side effect. I think our concerns with TPG Vodafone merger were justified, and so we'll be looking very closely at this.
Telstra was one of the most heavily traded ASX 200 shares on the ASX on Thursday, as my Foolish colleague Sebastian reported. More than 37 million shares in the telco have swapped hands in one day.
Meanwhile, TPG's share price fell nearly 7% in early morning trade after the company released its full-year results. TPG shares have since recovered.
TPG, Telstra share price snapshots
The Telstra share price has soared by about 26% in the past year, while it is plunging 5.5% year to date.
Meanwhile, the TPG share price has fallen 19% in the last 12 months, while it is down 3% year to date.
For perspective, the benchmark ASX 200 has returned about 3% over the past year.
Telstra has a market capitalisation of about $46 billion, while TPG has a market cap of roughly $10.6 billion.
