Vodafone Hutchison Australia says it and TPG Telecom will fight for the right to merge, hours after Australia’s competition watchdog declared it would oppose the $15 billion tie-up.
The two companies would will launch legal action in the federal court, Vodafone said late Wednesday, following the Australian Competition and Consumer Commission’s inadvertent disclosure it was opposing the merger.
Shares in TPG closed 95 cents, or 13.5 per cent, lower at $6.07, while those in Hutchison Telecommunications – Vodafone’s local partner – dropped as much as 37.5 per cent before closing down 28 per cent at 11.5 cents.
The ACCC’s ruling was supposed to have been announced on Thursday but at 1523 AEST traders spotted it published prematurely on the ACCC’s merger registry and quickly began selling stock in both companies.
VHA chief executive Inaki Berroeta said the company is firmly committed to the tie-up.
“VHA respects the ACCC process but we believe the merger with TPG will bring very real benefits to consumers. We have therefore decided VHA should, together with TPG, pursue approval of the merger through the Federal Court,” said Mr Berroeta.
He said the merger was about combining two complementary companies with very little business overlap.
“VHA is an established mobile business with less than one per cent of the fixed broadband market, while TPG is the second largest fixed broadband player with no mobile network,” said Mr Berroeta.
The ACCC saw it very differently, arguing the combination of two big players would be to the detriment of consumers.
“The proposed merger between TPG and Vodafone is likely to 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,” the ACCC said.
Chair Rod Sims said TPG had a proven track record of disrupting established markets to the benefit of consumers and would likely offer cheaper mobile plans to compete with Telstra, Optus and Vodafone.
“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,” Mr Sims said.
The consumer watchdog had been reviewing the proposed merger since September.
But it already said in December the merger would diminish competition by removing TPG as an independent competitor.