ACCC confirms its opposition to merger of TPG and VHA

8 May 2019

The proposed merger between TPG Telecom and Vodafone Hutchison Australia (VHA) has sailed into choppy waters with the revelation that it has been opposed by the Australian Competition and Consumer Commission (ACCC). In a press release outlining the reasoning behind its position, the competition watchdog stated that it considered the tie-up would ‘substantially lessen competition in the supply of mobile services because the proposed merger would preclude TPG entering as the fourth mobile network operator in Australia.’

Speaking on the decision to oppose the merger deal, ACCC chairman Rod Sims was cited as saying: ‘Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly … Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability.’

TPG had previously started rolling out mobile infrastructure using Huawei equipment in 2017, though in January 2019 the operator announced that it was halting the network deployment as a result of the Federal Government’s 5G security guidance. Despite this, with the ACCC suggesting that TPG faces reducing margins in fixed home broadband due to the NBN rollout, and arguing it has the capability and commercial incentive to resolve any technical and commercial challenges, Mr Sims suggested: ‘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.’