ACCC rejects TPG and Vodafone merger proposal

The ACCC was due to hand down its ruling tomorrow but accidentally published its decision online this afternoon.

“The ACCC has decided to oppose the proposed merger,” the ACCC said in a short statement.

“This information was inadvertently published online on our mergers register briefly this afternoon. We intend to publish a further media release shortly.”

The decision will surprise many industry analysts and comes after the ACCC flagged concerns over impacts to consumers.

The merger had support from much of the industry including from consumer advocate Australian Communications Consumer Action Network, but in December the ACCC announced it was delaying the decision to better understand the impact on mobile customers.

Vodafone Australia is joint-owned by UK company Vodafone Group and Hong Kong-based firm Hutchison, and has the third-biggest mobile network in the country and a small business providing NBN plans.

TPG is primarily a fibre infrastructure and broadband retail business. It also owns iiNet and Internode and has extensive fibre networks and high density cells in metropolitan areas that would have significantly boost edVodafone’s efforts to rollout 5G mobile technology.

Following the news of the ACCC’s opposition to the merger, TPG’s share price fell dramatically by 14 per cent while Hutchison’s dropped by 28 per cent nearing the close of trade.

CEO of Vodafone Hutchison Australia, Inaki Berroeta, would have been the CEO of the combined company in TPG-Vodafone mega-merger. Picture: Hollie AdamsSource:News Corp Australia

Under the merger, the two telcos would have combined their different assets to challenge the dominance of Telstra and Optus.

However when the merger was announced, TPG was publicly planning to come to market with its own mobile deal for customers that promised to offer a cheap and potentially disruptive option for mobile customers.

Whether TPG truly had intentions to take on Telstra, Optus and Vodafone with its own mobile network remains a point of contention for some in the industry. In an already crowded mobile market, it’s unlikely Australia has the population to viably support four mobile operators given the high cost of rolling out and maintaining a network.

In December, the ACCC chairman Rod Sims noted: “Our preliminary view is that TPG is currently on track to become the fourth mobile network operator in Australia, and as such it’s likely to be an aggressive competitor.”

However in January, TPG announced it would cease the rollout of its mobile network, blaming added costs due to the Australian government’s ban on the use of equipment from Chinese vendor Huawei to build Australia’s 5G mobile networks.

TPG said it had spent $100 million on its mobile rollout and committed a further $30 million. In 2017 it also paid $1.26 billion for mobile spectrum.

Many saw TPG’s January announcement as a way to put pressure on the ACCC to approve the merger, and use the Huawei ban as a scapegoat.

Telecom expert Paul Budde

Ahead of the regulator’s decision, ACCAN chief executive Teresa Corbin said the consumer organisation did not oppose the merger.

“TPG is more focused on broadband, while Vodafone has a stronger presence in the mobile market, so really they are complementary,” she told ITWire earlier this week.

“A strong third player in the telecommunications market, like the proposed merged company, could also have greater power to place pressure on Telstra and Optus to lower their prices, increasing affordability for consumers.”

More to come


Related posts

Make a comment