Australia’s competition regulator will not oppose Vocus Group’s proposed acquisition of TPG Telecom’s fixed line business, enterprise, government, and wholesale customer base as well as its fibre and transmission networks.
The greenlight, which comes months after the Australian Competition and Consumer Commission cleared a different TPG-Optus network sharing agreement, sent TPG’s shares up more than 5% on Thursday to around $4.80.
By way of the TPG-Vocus $5.25 billion deal, Vocus will operate a network of more than 50,000km of owned or leased fiber and almost 15,000km of international submarine cables.
It also includes TPG’s Vision Network wholesale residential broadband assets – with assets in major cities including Ballarat, Mildura, and Geelong – supporting Vocus’ consumer and NBN wholesale business.
Vocus supplies fibre and network services to government, enterprise and wholesale customers, as well as communications and technology services to small and medium sized businesses, and retail telecommunications services to consumers.
TPG too supplies fixed broadband services to consumers, business and government customers and supplies wholesale telecommunication services.
The ACCC said that its review focused on how closely Vocus and TPG compete in the supply of data network and connectivity services, including fixed-line internet services, to large enterprise and government customers.
“Our investigation found that Vocus concentrates on supplying large enterprise and government customers, whereas TPG focuses on the small and medium enterprise segment of the market,” said ACCC Commissioner Dr Philip Williams.
“After the acquisition, Vocus will continue to face strong competitors including Telstra, Optus, Aussie Broadband, Superloop and managed service providers in supplying government, large enterprise, and SME customers.”
The ACCC also weighed the impact of the acquisition in the supply of fixed line voice services, NBN wholesale aggregation services, and data centre, cloud and security services. “Overall, we did not find that the acquisition would likely result in substantially lessening competition in any market,” noted Williams.
TPG also operates a mobile network, which includes the Vodafone brand in Australia. However, this is not part of the proposed acquisition.
As part of the agreement, Vocus will provide fixed network services back to TPG for a fee of A$130 million per annum.
That agreement of Vocus to provide services to TPG has an initial 15-year term with two 10-year extensions at TPG’s election and is designed to ensure TPG maintains “owner economics” of the fibre network.
