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Vodafone Leads TPG, ACCC Merger Appeal

Vodafone Hutchinson Australia (VHA) has submitted a statement of claim to the Federal Court, asserting its 5G network will be inferior to Optus and Telstra, should its merger with TPG Telecom be denied.

The claim seeks to appeal the ACCC’s opposition of its $15 billion merger with TPG, prematurely announced in early May.

Deemed an interesting move by some commentators, Vodafone Hutchinson Australia is the lead applicant in the claim, with TPG the second respondent.

Reported by the Australian Financial Review, the 47-page statement of claim reveals Vodafone had shared over 25,000 documents for the ACCC to review, alongside seven presentations.

The telco’s primary argument surrounds a lack of radio spectrum, with the merger providing access to TPG’s spectrum and financial resources.

“For legal process reasons, the Statement of Claim identifies VHA as the applicant and the Australian Competition and Consumer Commission and TPG as the respondents,” claims TPG in a statement.

“TPG and VHA are working together to progress the proceedings and TPG supports the orders being sought in the VHA application.”

Vodafone asserts its ability to compete with Telstra and Optus will be significantly impaired, with the ban on Huawei 5G equipment notching higher costs and roll-out delays.

Spectrum is deemed crucial to the forthcoming telco war, with ample supply reducing congestion and slow end user speeds.

Should the merger be denied, Vodafone Hutchinson Australia asserts its network will likely become “highly congested”, with “limited geographic range.”

ACCC Chair, Rod Sims, rationalised his opposition of the merger by stating TPG’s proposed network build was “likely the last chance” for stronger mobile service supply in Australia.

“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,” claimed Mr Sims at the time.

“Wherever possible, market structures should be settled by the competitive process, not by a merger which results in a market structure that would be subject to little challenge in the future”

“This is particularly the case in concentrated sectors, such as mobile services in Australia.”

“After thorough examination, we have concluded that, if this proposed merger does not proceed, there is a real chance TPG will roll out a mobile network.”

The news comes after TPG Telecom ditched its plans to roll-out a local mobile network, citing the Australian government’s ban on Huawei 5G equipment a ‘key factor.’

The telco has rejected the ACCC’s assertions, affirming it does not plan to reignite the network build.

“The economic incentives for investing in, and pursuing, a rollout of TPG’s proposed 4G and 5G networks were fundamentally changed, given the inevitable increased costs, delays and competitive disadvantages that TPG would bear in pursuing its previously announced plans,” reads Vodafone Hutchinson Australia’s statement.

“There is not a credible business case for TPG pursuing a roll-out of a new mobile network.”

Shares in TPG Telecom have rebounded to $6.42, after plummeting to $6.34 in early May.

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