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Telstra rivals seek Adam takeover block
December 20, 2012
Telstra’s rivals have made a last minute call to Australia’s regulator to halt the incumbent carrier’s proposed acquisition of local ISP Adam Internet, stating it will impact competition in the market.
In a joint statement submitted to the Australian Competition and Consumer Commission (ACCC) Wednesday, senior executives from iiNet, Vodafone and Macquarie Telecom said the takeover would hit the retail broadband market and the wholesale market for transmission or backhaul The Australian reports.
In the statement, the three operators claim that ACCC approval of the takeover would be "evidence that there is a flaw in the law,” because the proposed deal “comes at a time when competition in communications markets is fragile, competitors' profits are under pressure and the investment market uncertain.”
Telstra announced its plan to acquire the south Australia-based ISP in October, with plans to turn the Adelaide-based ISP into a national budget broadband company that will target the low-cost sector of the market where BigPond cannot compete.
However, the opposing trio state that common sense “makes it difficult to understand how the ACCC could conclude anything other than that this acquisition would represent an unwelcome and unacceptable diminution of competition," given Telstra “still earns more than 95% of all communications markets revenues.”
The carriers also call for the regulator to ensure Telstra does not use Adam as a front “to avoid any of its regulatory obligations.”
The ACCC is set to decide today whether or not Telstra can go ahead with its acquisition of Adam Internet.
If the acquisition is approved Telstra's market share in South Australia would jump to at least 60% and close to 70% in Adelaide. If the ACCC ultimately rejects the proposed acquisition, industry watchers believe that the incumbent carrier will look to launch its own budget ISP under a different name.