Optus will be unable to continue running advertisements claiming it has the best mobile network in Australia under an interlocutory injunction obtained by Telstra on Wednesday in the Supreme Court of Victoria.
According to Justice Robson, Optus must "take all necessary steps to withdraw any advertisements or promotional material containing the alleged representation", after finding the ads may be potentially misleading or deceptive.
The full hearing will take place on Tuesday next week.
"I am satisfied that there is a serious question to be tried in relation to the allegations of misleading or deceptive conduct on the part of Optus," Robson J said.
The online ads and billboards across New South Wales, Victoria, and Queensland had used slogans such as "Empires end. That's what they do", and "The Optus Mobile Network has been ranked the best overall in voice and data", referring to last year's P3 Mobile Benchmark report, which ranked Optus first by a three-point margin.
Telstra had argued during the initial hearing that the ads of "undisputedly operating the best national mobile network" were misleading for consumers, and may cause customers to switch from Telstra to Optus by convincing them that the former no longer had the best mobile network.
"The content of the 2017 P3 report does not support the proposition that there has been a significant and permanent change in the relative market positions of Telstra and Optus, nor does it support the idea that Optus is now undisputedly operating a better mobile network overall than Telstra," Robson J said.
According to Robson J, Telstra could suffer "irreparable injury for which damages would not adequately compensate" if the ads were not removed prior to the trial.
"If the injunction is not granted, but then at trial Optus is found to have engaged in misleading or deceptive conduct causing Telstra loss, then Telstra will have lost some customers and suffered some injury to its brand -- both of which will be difficult to quantify and to compensate adequately," he said.
Telstra said it is pleased with the court's interlocutory decision finding the advertising is misleading, a spokesperson said in a statement.
"Telstra's mobile network is the best in Australia, providing the greatest coverage and faster speeds in more places, and we believe advertising that tries to suggest anything else is an attempt to mislead consumers," the spokesperson added.
An Optus spokesperson pointed again to the P3 benchmark test, saying the company believes it "is worth celebrating and communicating", and adding that Telstra has "lost its sense of humour".
"P3 is an independent, internationally respected network benchmarking company," the Optus spokesperson stated.
"Unfortunately, our competitor is clearly unhappy about losing to Optus, and has no doubt lost its sense of humour in the process. Optus believes Australians should know Optus has an alternative, award-winning premium mobile network that delivers great value for customers.
"Optus will continue to invest and compete for customers across cities, in regions and rural locations with a premium quality network that continues to improve, expand, and deliver customers great value and must-have sports and entertainment content."
Telstra had earlier this week provided a Q3 financial update, speaking of market challenges including 5G and TPG entering the mobile market, providing a pessimistic view of FY19.
Due to the challenges, and its post-paid mobile average revenue per user (ARPU) declining -- which was down by 3.6 percent to AU$65.35 per month for Q3 -- Telstra expects its full-year FY18 earnings before interest, tax, depreciation, and amortisation (EBITDA) to be at the bottom end of guidance, with "challenging trading conditions" to continue into FY19.
EBITDA is now expected to be at the bottom of the AU$10.1 billion to AU$10.6 billion guidance range; capex is expected to be in the mid to upper end of the AU$4.4 billion to AU$4.8 billion range; and income is expected around the middle of the AU$27.6 billion to AU$29.5 billion range.
Despite this, Telstra added 60,000 net post-paid subscribers during Q3.
Optus is set to present its financial results on Thursday.
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