Vodafone, iiNet and Macquarie oppose Adam Internet sale to Telstra

'Flaw in the law' if deal is approved by ACCC, say competitors.

Telstra rivals have condemned the Australian telecom giant’s proposed acquisition of Adam Internet as a move that will reduce telecom competition.

Vodafone Hutchinson Australia, iiNet and Macquarie Telecom opposed the deal in a joint statement released today. The acquisition, announced in October, requires approval by the Australian Competition and Consumer Commission (ACCC)

“We believe that if the ACCC cannot identify that this acquisition would result in a substantial lessening of competition it is evidence that there is a flaw in the law,” the competitors said in the statement.

Adam Internet is the last independent ISP in South Australia.

“Telstra’s proposed acquisition of Adam Internet represents a clear and substantial lessening of competition in two markets—the retail market for broadband services and the wholesale market for transmission or backhaul services,” said Vodafone, iiNet and Macquarie.

“This comes at a time when competition in communications markets is fragile, competitors’ profits are under pressure and the investment market uncertain.”

The deal especially hurts the wholesale telecom market, the Telstra competitors said.

“These markets are profoundly important for both the costs to end users of all communications services—broadband, mobile and traditional voice services—but also for the success of the transition to a competitive national broadband network,” they said.

“The fact that Telstra alone still earns more than 95 per cent of all communications markets revenues illustrates how simple 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.”

On a teleconference with media in October, Telstra and Adam Internet officials emphasised the smaller ISP would retain some degree of independence after completion of the deal.

“Adam’s going to continue to operate and make its own commercial decisions about what product it’s going to put together and what prices it’s going to offer out there in the market,” Kate McKenzie, a director with Telstra, said on the call.

“Adam is still going to stand alone. It’s not a mini Telstra,” Adam Internet executive chairman, Greg Hicks, said on the same call. “Everything stays as it is.”

Telstra was contacted for comment.

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Tags macquarie telecomacqusitionAdam InternetISPVodafoneTelcotelecomiiNetcompetititonTelstramerger

More about Adam InternetAustralian Competition and Consumer CommissionAustralian Competition and Consumer CommissionIinetMacquarie TelecomTelstra CorporationVodafone

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