Vodafone's Australia merger blocked
A PLANNED €7bn merger of Vodafone's struggling Australian business with TPG Telecom was blocked by the regulator in a bungled announcement published early that sent stocks tumbling.
The proposal would "substantially lessen competition" for mobile-phone services in an already concentrated market, the Australian Competition and Consumer Commission said in a statement Wednesday. TPG is Australia's best - and probably the last - chance to gain a new cellular network operator, ACCC Chairman Rod Sims said in the statement.
A protracted legal battle between the companies and the regulator now looms. TPG and Vodafone Hutchison Australia, Vodafone's unprofitable mobile-phone venture with CK Hutchison Holdings, said they're still committed to a union and will challenge the ACCC's decision in the Federal Court.
Hanging in the balance is a proposal to create a new Australian tech giant selling mobile phone and broadband services that's worth an estimated A$10.9bn (€7bn). If the deal is blocked, former Australian phone monopoly Telstra and Optus - owned by Singapore Telecommunications - would only gain more power, TPG said. The ACCC's decision must be challenged, it said.
The watchdog's decision also scuppers Vodafone's plan to breathe new life into a mobile-phone partnership that has struggled to make inroads in Australia. In almost a decade of operations, Vodafone Hutchison won only 19pc of the local mobile-phone market. Nicknamed Vodafail by some, the venture struggled to overcome a reputation for patchy coverage and dropped calls.
There had been speculation that Vodafone would look to exit Australia completely. The UK phone giant's planned union with TPG was an attempt to salvage something from an entity that some analysts said was essentially worthless.
"We believe the merger with TPG will bring very real benefits to consumers," Vodafone Hutchison chief executive officer Inaki Berroeta said in a statement. He said the businesses have little overlap and can deliver more for Australian consumers together than they can alone.
The ACCC, which typically publishes its rulings when shares aren't trading, fumbled the release of its decision, sending TPG stock into meltdown. Scheduled for release Thursday, the decision was briefly visible on the regulator's website on Wednesday afternoon - before it was removed. The ACCC later confirmed its opposition to the deal and blamed a technical error for the inadvertent publication.