Home > Communication > ACCC Concerned About TPG-Vodafone Merger, Shares Slump

ACCC Concerned About TPG-Vodafone Merger, Shares Slump

UPDATE – Shares in TPG Telecom have continued to take a battering, slumping 16.67% to $6.45 after midday, as Hutchinson dives 17.86% to 12 cents.

The ACCC has expressed “preliminary competition concerns” about the merger of TPG Telecom and Vodafone Hutchinson Australia – a $15 billion deal set to create a formidable rival against Telstra and Optus.

The news has sent shares in TPG diving 18% at the open to $6.35, while Hutchison plummets 36% to 9 cents.

In a published statement today, the ACCC asserts removing TPG as an independent competitor – with its own network – will likely result in a substantial lessening of competition.

“If TPG remains separate from Vodafone, it appears likely to need to continue to adopt an aggressive pricing strategy, offering cheap mobile plans with large data allowances,” claims ACCC Chair Rod Sims.

“Our preliminary view is the merged TPG-Vodafone would not have the incentive to operate in the same way, and competition in the market would be reduced as a result”

“A mobile market with three major players rather than four is likely to lead to higher prices and less innovative plans for mobile customers.”

The merger leverages assets between both companies – Vodafone owns and operates its own mobile network, and supplies fixed broadband services on the NBN, whilst TPG supplies retail fixed broadband and voice services, amidst building its own local mobile network.

The ACCC believes TPG could become an “aggressive competitor”, with the telco on track to become Australia’s fourth mobile network operator.

Submissions are invited from interested parties on the Statement of Issues by 18 January 2019, with the ACCC’s final decision scheduled for 18 March 2019.

The regulator is examining the likely impact of removing Vodafone as a fixed broadband competitor, citing strong brand recognition and its existing retail mobile customer base.

The long-term industry impact is also being reviewed, noting an increased uptake of mobile broadband services (replacing fixed broadband) after the launch of 5G.

“The ACCC is continuing to consider whether operators will need to offer both mobile and fixed broadband services in the longer-term to remain competitive, meaning that TPG and Vodafone will necessarily be closer competitors in the future,” states Mr Sims.

Further information is available on the ACCC’s website here.

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