Australia regulator blocks massive TPG-Vodafone merger

Regulators said the tie-up would 'reduce competition and contestability' in the telecoms sector
Regulators said the tie-up would 'reduce competition and contestability' in the telecoms sector

Australian regulators on Wednesday blocked the multi-billion-dollar merger between Vodafone Hutchison Australia and TPG Telecom, in a surprise announcement that sent shares in the two firms plunging.

The two firms announced in August a deal to form a Aus$15 billion (US$10.5 billion in today's exchange rates) unit to take on Telstra and Optus in an increasingly competitive telecoms sector.

But the Australian Competition and Consumer Commission said the "will reduce competition and contestability".

"The ACCC has concluded, in particular, that the proposed merger between TPG and Vodafone is likely to substantially lessen competition in the supply of mobile services because the proposed merger would preclude TPG entering as the fourth mobile network operator in Australia," it said.

Vodafone Australia—privately-owned by Hong Kong-based CK Hutchison and Britain's Vodafone Group—is the nation's third largest mobile operator with a customer base of around six million subscribers.

TPG is one of the country's largest internet service providers. It has a fixed-line residential subscriber base of more than 1.9 million people and significant corporate, government and wholesale business.

Shares in Hutchison Telecommunications Australia, which holds the Hong Kong firm's stake in Vodafone, collapsed 28.12 percent to Aus$0.12 Sydney. TPG tumbled 13.53 percent to Aus$6.07.

Consumer advocacy group the Australian Communications Consumer Action Network (ACCAN) has said on Monday that the merger should go ahead.

The group's chief executive Teresa Corbin said the firms were "two separate companies merging with really different customer bases".

"We felt if there was a telco that was a really good third player in the market that would actually push prices down overall for Telstra and Optus as well," she told The Australian Financial Review.


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Citation: Australia regulator blocks massive TPG-Vodafone merger (2019, May 8) retrieved 15 October 2019 from https://phys.org/news/2019-05-australia-blocks-massive-tpg-vodafone-merger.html
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