Stop Adam! Rivals Block Telstra Takeover
iiNet and Optus both made submissions to ACCC seeking to prevent the nation’s biggest telco from snapping up South Australia ISP Adam Internet, announced last month.
The proposed takeover is part of Telstra’s business strategy to its grow customer base and build new business.
Telstra is proposing retain the Adam brand, its 90000 plus customers and run the company as a stand-alone subsidiary, but intends to expanding the SA ISP nationally.
South Australia based iiNet in particular seemed fiercely irked by the move and sought to ramp up its customer offering as soon as the bid was announced in October, worried an enlarged Adam would kill competition in the local broadband market and would get “sweetheart deal” from Telstra wholesale, allowing it to lower its prices.
iiNet chief regulatory officer Steve Dalby said “We’re very concerned that Telstra will use Adam as a vehicle to increase its market share in the price-sensitive end,” in a confidential submission to ACCC on the takeover seen by The Australian.
“If Telstra is also able to offer favourable wholesale terms to Adam, then competition will suffer as a result.”
It is not known what Optus precise concerns were but are likely to be similar to iiNet, who are calling on the ACCC to require Telstra to run Adam as a stand alone company with no favourable business deals with the larger parent.
The ACCC is currently considering the takeover under section 50 of the Competition and Consumer Act 2010 that prohibits acquisitions that “substantially lessen” competition in a market, or are likely to do so.
The ACCC has suspended its original decision date on the takeover from the 13 December until a yet unannounced date as it is awaiting additional information from the merger parties, it said last week.