Australia's ACCC to oppose TPG-Vodafone merger

09 May 2019

Australian competition regulator ACCC has decided to oppose the proposed A$15 billion ($10.4 billion) merger between Australian fixed line operator TPG Telecom and mobile operator Vodafone Australia on competition grounds.

In making its decision, the regulator stated that it has concluded that there is a real possibility that TPG will enter into the mobile market as Australia's fourth mobile network operator if the merger does not proceed.

TPG already has around 430,000 mobile subscribers through its MVNO arrangement with Vodafone Australia, and had announced in April 2017 that it plans to deploy its own mobile network after acquiring A$1.26 billion ($880.4 million) worth of 700-MHz spectrum.

But in January, the operator revealed it was abandoning plans to deploy the network, citing the decision by the Australian government to ban the use of equipment from its primary vendor Huawei in Australian 5G networks. The operator elected to take a writedown on its investment rather than continue to spend on deploying a mobile network that can't be upgraded to 5G.

ACCC chair Rod Sims called TPG the “best prospect Australia has for a new mobile network operator to enter the market, and... likely the last chance we have for stronger competition in the supply of mobile services.”

Due to competitive pressures, Vodafone has also started providing services over Australia's National Broadband Network as a retail service provider, also enhancing competition.

But TPG and Vodafone Australia have revealed plans to appeal the ACCC's opposition of their merger in Australia's Federal Court. The companies will seek to argue that the proposed merger will not substantially lessen competition or lead to reduced prices for consumers.

TPG and Vodafone Australia have already established a joint venture to acquire 3.6-GHz spectrum for their planned joint operations. The ACCC said this venture will not be dissolved if the merger is blocked.

Image: iStock Photo

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