Telco titans Vodafone and TPG are given the go ahead to merge

Alonzo Simpson
February 15, 2020

But Vodafone appealed the decision in federal court on Thursday, with Justice John Middleton ruling the merger would go ahead because it would not lessen competition.

ACCC Chair Rod Sims said the decision would be to the detriment of consumers.

TPG has already spent AUD 1.26 billion on the spectrum needed to build a mobile network, has an extensive transmission network, as well as a large customer base, and already established brands in TPG, iiNet and Internode.

Amaysim chief executive officer Peter O'Connell also welcomed the merger and said "the Australian mobile market has always been dominated by Optus and Telstra".

Vodafone says it's now accelerating its roll-out of 5G networks. The ruling overturns the merger's block by the Australian Competition and Consumer Commission (ACCC) in May 2019.

Justice John Middleton delivered the decision in the Federal Court this morning, after a three-week hearing in September a year ago.

Finally, and further suggesting that all may not be said and done, the ACCC noted that they are now 'carefully considering the judgment'.

Simms also defended the ACCC's decision to bring the court case in the first place, which VHA CEO Iñaki Berroeta argued allowed "free kicks" to its rivals due to the uncertainty.

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"Mobile telecommunication services are integral to Australia's social and economic future and Telstra, Optus and Vodafone already control nearly 90 per cent of the market", he said. In August 2018, both companies announced their intention to compete more effectively with Telstra and Optus, the two telecommunications companies that have dominated the telecommunications market so far and continue to do so. These concerns were reinforced by statements from the industry welcoming the merger and the consequent "rational" pricing, the regulator said.

He also said TPG was unlikely to try to build a mobile network anytime soon.

The company had sought to get out of the MVNO game by building its own 4G network, but said it abandoned those plans after the federal government banned the use of Huawei technology.

TPG shares ended up more than 11% yesterday at $8.15.

The ACCC had argued the two companies should not be allowed to merge because it would stop any chance of TPG becoming Australia's fourth mobile network operator - a new competitor to Telstra, Optus, and Vodafone.

Justice Middleton further added that it was not the ACCC's responsibility to 'engineer competition, ' and that 'leaving TPG and Vodafone in their current state would not create more competition in the market'.

Vodafone Hutchison Australia - a venture between Vodafone's Australian mobile-phone division and CK Hutchison Holdings - said the merger should now be completed by the middle of this year, subject to any appeal.

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