The Australian Competition and Consumer Commission (ACCC) has extended its provisional timeline for a decision on whether to allow the merger of TPG and Vodafone Hutchison to go ahead.
The competition regulator in December said that it would seek further information before blessing the union of the two telcos. The ACCC released a statement of issues explaining its qualms about the merger, including its view that a tie-up between the pair could “substantially lessen competition in the market for retail mobile services nationally”.
The ACCC’s statement said that its “preliminary view is that the proposed merger will result in a more concentrated and less competitive market by removing TPG as a strong competitor.”
The commission indicated today that, provisionally, it now expects to deliver a decision on the merger on 11 April. Previously it had expected to make a decision on 28 March; the ACCC said the shift in timeline was due to a “delay in receiving information from merger parties”.
Vodafone and TPG in August detailed their plans for a “merger of equals”.
If the deal goes ahead, the merged entity will be owned 49.9 per cent by TPG shareholders and 50.1 per cent by VHA’s shareholders: Vodafone and Hutchison Telecommunications Australia.
The merged group will be listed on the ASX as ‘TPG Telecom Limited’. TPG CEO and chairperson David Teoh will be the non-executive chair of the merged group, while VHA chief executive Iñaki Berroeta will be CEO.
The post-merger entity will have around a fifth of the Australian mobile market, and around 22 per cent of the fixed-line broadband market, with a pro forma enterprise value of $15 billion.
Together, the companies have 6.4 million mobile subscribers. TPG has around 1.9 million broadband customers, with Vodafone only a relatively recent entrant to the fixed-line market.
Although the merger is yet to be greenlit by the ACCC, the two telcos formed a joint venture to bid in the government’s auction of 3.6GHz spectrum.
The joint venture spent $263 million, picking up 131 lots of spectrum in the band, which will be used to deliver 5G services. The JV was outspent by Telstra, which splashed $386 million on 143 lots in the auction.
‘Challenger’ telco coalition Commpete earlier this year said it was concerned about the impact of the merger on competition.
It said the ACCC should investigate measures taken in overseas markets where ‘four to three’ mergers have gone ahead that require a merged entity “make available network capacity to stimulate wholesale markets”.