The Australian Competition and Consumer Commission (ACCC) blocked a $11 billion merger between TPG Telecom and Vodafone on the grounds of competition. The ACCC’s rejection of the deal was accidentally uploaded earlier than expected. However, if the deal comes through, it would prevent both companies from competing in each other’s markets.
Although both companies are yet to take a position based on ACCC’s announcement, it puts undue pressure on their growth plans. TPG and Vodafone have agreed to extend the deadline for completing the merger until August 31, 2020.
Mathan Somasundaram, Market Portfolio Strategist at stockbroker Blue Ocean Equities in Sydney, said, “Both of them are really out of plan B. Vodafone needs a dancing partner and TPG needs scale.”
The merger is the largest deal ACCC has blocked over the past many years. ACCC Chairman Rod Sims said in a statement, “TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services.”
TPG shares dropped 15 percent and are at a five-month low, Reuters reports. This is where the company nearly stood before the deal was signed.
Vodafone CEO Inaki Berroeta said that ACCC’s decision is ‘extremely difficult to understand’.