The ACCC found when blocking the merger that TPG was likely to resume its plans to roll out a mobile network if the merger did not go ahead.
A trial plank of Vodafone and TPG’s case is that TPG could only build the network with Huawei’s cheap technology.
Counsel for the ACCC, Michael Hodge, QC, tested Mr Teoh’s claim TPG believed it could be a first mover in 5G after engaging with Huawei.
“Yesterday your counsel opened that there were four reasons why you selected Huawei,” Mr Hodge said.
“First, was that you thought that Huawei had the cheapest prices.
“The second reason that was said to be even more important was because the equipment had an easy upgrade path to 5G.”
Mr Teoh responded: “That is correct”.
Mr Teoh told the court that TPG was first interested in Huawei’s non-5G technology, known as a cloud-ran solution, and later became aware it could also provide a 5G network through a type of technology known as massive MIMO.
“There are two stages, we selected the HW cloud rand solution in late 2017.”
“When they told us about the massive MIMO in 2018 there is a possibility that we could bring up 5G quite quickly,” he said.
Mr Hodge took Mr Teoh to the company’s claims that it had hoped to be one of the earliest providers of 5G, grilling him about when the company made that realisation, asking him when the company learned that.
“When we selected the cloud ran solutions,” Mr Teoh said. This was despite Huawei not having the massive MIMO technology required to build a 5G network until 2018, the court heard.
“As I understand your evidence, you formed the view that you would be one of the earliest? At that time you had no spectrum to roll out 5G.”
Mr Teoh responded: “Not on the 3.6 gigahertz [spectrum, ie the 5G spectrum]”
Mr Hodge asked: “You hadn’t identified any receiver or transmitter device.”
Mr Teoh responded: “That’s correct.”
Mr Teoh was also asked about the company’s official plans to buy spectrum to set up its own 4G network in 2017.
Mr Teoh and Mr Hodge became flustered with each other during the proceedings over Mr Hodge’s use of the term business plan and Mr Teoh’s use of the term business model to describe a similar presentation to the TPG board.
It led Mr Hodge to ask Mr Teoh at least four times: “Is it your evidence that the board wouldn’t approve you making any offer for 700MHZ spectrum until you had put a business plan in front of them. ..
“This is a lot of money. The board has to approve it.”
Mr Teoh responded: “[TPG CFO Stephen] Banfield presented the model to the board, on that basis the board approved for us to bid for the spectrum.”
He then added, lowering his voice: I have to be very careful with the timing.
Earlier the court heard Vodafone Hutchison Australia saw TPG’s plans to enter the mobile network market as “the biggest and most serious threat” the telco was facing.
Vodafone chief executive Inaki Berroeta was shown a series of internal documents relating to “project amplify” – an internal review set up to discover more about TPG’s plans.
Under questioning from ACCC counsel Catherine Button, Mr Berroeta said project amplify was set up to “query the strategy of TPG because it had provided very limited information to the market” after TPG purchased $1.2 billion of 700 megahertz spectrum.
“It was quite open-ended because it was more of a working material to understand the implications,” Mr Berroeta said.
Dr Button challenged Mr Berroeta over his description of the document as working material.
“It extended to actions to be taken by VHA [Vodafone Hutchison Australia] if TPG did anything,” Dr Button asked.
“It was more a discussion material than a concrete plan,” Mr Berroeta said.
Earlier Mr Berroeta was shown separate documents that allegedly showed Vodafone was confident it would be able to compete with Telstra and Optus without the merger. This was despite both companies claiming that they would not be able to compete without the merger.
Dr Button confronted Mr Berroeta after showing the documents: “You paint a rather gloomy picture of VHA’s enterprise business here… But this document showed it had won awards … and clients.”
Providing one of the few light moments in the trial, Mr Berroeta quipped: “More awards than clients, I have to say.”
Sarah Danckert is a business reporter.