The Australian Competition and Consumer Commission (ACCC) has blocked plans for a network sharing agreement between Telstra and TPG Telecom.

This proposal has been blocked amid fears on its long-term impact on prices and coverage. Both operators are planning to appeal the decision.

In a detailed statement, ACCC Commissioner Liza Carver said that the agreement would distort competition.

“We examined the proposed arrangements in considerable detail. While there are some benefits, it is our view that the proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage,” she said.

The proposal would have seen TPG Telecom decommission or transfer mobile sites across regional and fringe urban areas to Telstra after the two companies penned the 10-year network-sharing agreement in February.

According to the ACCC, this would favor Telstra, as it would have a high proportion of key spectrum in those areas.

“Telstra is already the strongest mobile network operator in Australia and has a very high share of regional customers. We consider that the proposed arrangements would lock up valuable spectrum with Telstra, raising barriers to entry and expansion and reducing the incentives and ability of rivals to compete,” Carver added.

In a statement, TPG Telecom chief executive Iñaki Berroeta, said: “The ACCC’s decision to deny the TPG Telecom-Telstra network sharing arrangement is a missed opportunity to deliver greater competition and choice for the people of regional Australia."

Meanwhile, the blocking of the deal has been welcomed by rival operator Optus, which has previously criticized the agreement. Optus labeled the decision a "victory for Australians."