TPG Telecom and Vodafone challenge ban on $10bn Australian m

TPG Telecom and Vodafone challenge ban on $10bn Australian merger

10 September 2019 | Alan Burkitt-Gray

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TPG Telecom, the Australian company that owns AAPT and Pipe Networks, has started its challenge to the regulator’s decision to block a merger with the local branch of Vodafone.

Vodafone Hutchison Australia (VHA) and TPG announced more than a year ago that they wanted to merge to create a new, fully integrated operator, in a $A15 billion (US $10.3 billion) deal.

But the Australian Competition and Consumer Commission (ACCC) stepped in to block it.

Now VHA and TPG have begun their challenge in an Australian court, with the counsel for VHA saying the ACCC is “wrong as a matter of commerce, wrong as a matter of economics, wrong as a matter of technology, and wrong as a matter of law”.

The ACCC justified its position by saying a merger would reduce competition in the mobile sector – even though TPG has separately decided to end investment in 5G telecoms because the Australian government will not let it use Huawei kit.

David Teoh, executive chairman of TPG, said in January: “It is extremely disappointing that the clear strategy the company had, to become a mobile network operator at the forefront of 5G, has been undone by factors outside of TPG’s control.”

VHA’s lawyer, Peter Brereton, said in court today: “There isn’t a real chance that TPG will pursue the rollout of a new mobile network. There is not a real chance that TPG will become the fourth mobile network.” He said it would be “commercially crazy” for TPG to pursue its mobile ambitions.

TPG’s lawyer, Ruth Higgins, agreed, saying TPG “does not and never has operated a mobile network”. She said the ACCC’s theory that TPG would revive its mobile ambitions “is appealing only if you don’t look too closely at the detail”.

The case, in Australia’s federal court, continues, but no decision is likely until early 2020.