ACCC opposes TPG–Vodafone merger

The ACCC is opposing the proposed merger between TPG and Vodafone on the grounds that it would reduce competition and contestability in the telecommunications sector.

The regulator’s decision is largely based on the fact that TPG had abandoned plans to roll out its own mobile network following the announcement of the proposed merger.

TPG, which had appointed Huawei as its primary mobile equipment supplier, blamed its decision to abandon the rollout on the move by the federal government to ban the use of Huawei equipment in Australian 5G networks. The operator stated that it saw little point in deploying a mobile network that can’t be upgraded to 5G in the future.

But ACCC Chair Rod Sims said after investigating the proposed merger, the regulator has concluded that there is a real chance that TPG will roll out a mobile network if its merger with Vodafone does not proceed.

“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,” he said.

“TPG has a proven track record of disrupting the telecommunications sector and establishing itself as a successful competitor to the benefit of consumers. TPG is likely to be a vigorous and innovative supplier of mobile services in Australia, offering cheaper mobile plans with large data allowances and competing strongly against incumbents Telstra, Optus and Vodafone.”

TPG already has around 430,000 mobile subscribers through its mobile virtual network operator (MVNO) arrangement with Vodafone. The operator paid $1.26 billion for 2 x 10 MHz of 700 MHz spectrum nationwide in April 2017 to support its full entry into the market as a mobile network operator.

But the company has already revealed it intends to take a $228 million writedown on its abandoned mobile foray.

Sims noted that market trends have also motivated Vodafone to enter the market for fixed broadband services. The company started supplying nbn services to customers in Sydney, Canberra, Melbourne, Perth, Brisbane, Geelong, Newcastle and Wollongong in 2017, and as of the end of last year had 33,000 nbn subscribers.

“These moves by TPG and Vodafone are likely to improve competition and future market contestability,” he said.

According to the regulator, the joint venture TPG and Vodafone established to acquire 3.6 GHz spectrum in December will remain operational regardless of if the merger proceeds.

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