News Article

Australia regulator prevents a huge merger between TPG and Vodafone

Australian authorities prevented the multi-billion-dollar merger between Vodafone Hutchison Australia and TPG Telecom on Wednesday (May 8) in a sudden announcement that dropped stocks in both companies.

In August, the two companies announced an agreement to create an A$ 15 billion (US$ 10.5 billion) company to take on Telstra and Optus in a progressively competitive telecommunications industry.

But the Australian Commission on Competition and Consumer Affairs said that the merger “will decrease business and contestability.”

“In specific, the ACCC found that the suggested partnership between TPG and Vodafone is probable to significantly reduce competition in the provision of portable facilities as the suggested merger would prevent TPG from becoming Australia’s fourth phone network carrier,” it said.

Vodafone Australia, owned by Hong Kong-based CK Hutchison and the UK Vodafone Group, is the nation’s third-biggest phone carrier with a client base of around six million users.

TPG is a leading internet service provider in the country. It has a fixed-line residential user base of over 1.9 million individuals and a large commercial, public, and wholesale company.

Shares in Hutchison Telecommunications Australia, holding the Vodafone stake of the Hong Kong firm, fell to A$ 0.12 by 28.12 percent. TPG dropped to A$ 6.07 by 13.53 percent.

The Australian Communications Consumer Action Network (ACCAN)’s consumer support group said on Monday that the partnership should continue.

Teresa Corbin, the group’s chief executive, said the firms were “two distinct firms merging with really distinct client bases.”

“We thought that if there was a telco on the market that was a nice third player that would effectively move down general rates for Telstra and Optus as well,” she said.

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