With the Australian telecommunications and IT company TPG Telecom’s merger with Vodafone blocked by the Australian Competition and Consumer Commission’s (ACCC), the leading telecom giant has filed a case with an Australian court to proceed with the potential merger.
The merger between TPG Telecom and Vodafone Hutchison Australia was worth $10 billion. The reason for ACCC to block the merger is because the proposed deal would reduce competition and competition in the telecom sector, it said in a statement. The merger might ‘preclude’ TPG from entering as the fourth mobile network operator in Australia.
According to Bloomberg, ACCC Chair Rod Sims had said that ‘it’s embarrassing’, reinstating his opposition to the deal.
The mobile services market in Australia is very concentrated, with three network operators, Telstra, Optus, and Vodafone. They control 87 percent of the market share. That said, the fixed broadband market is also concentrated with Telstra, TPG, and Optus having nearly 85 percent of the market share.
“Given the longer-term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly.”
“Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability,” he said.
He worries that the merger could stop TPG from entering as the fourth mobile network operator in Australia. He said that TPG is the best contender for a new mobile operator network Australia has to enter the market. With the merger, the situation might reverse completely.
TPG said in a statement last week that the parties will try to fasten the proceedings.