Court approves Vodafone-TPG merger, overruling regulator

A Federal Court in Australia approved a A$15 billion or $10.1 billion merger between Vodafone and TPG Telecom, overruling a regulator.
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The judge said the merger between Vodafone’s joint venture with Hutchison Telecommunications (Australia) and TPG would not harm competition, rejecting the Australian Competition and Consumer Commission’s (ACCC) reason for blocking the deal last year.

The ruling revives a plan to challenge the dominance of Telstra and Singapore Telecom’s Optus in the Australian telecom. The merge will allow TPG, an internet company, and Vodafone, a mobile phone company, to ensure access to each other’s nationwide networks.

TPG had been looking for a way into the 5G mobile market – where Vodafone is gearing up to compete – after halting construction of its own network due to an Australian ban on parts supplied by China’s Huawei Industries.

“This merger…gives a lot more certainty that there will be a strong 5G player in the market. We have confirmation we’ll have three 5G players,” Vodafone Hutchison Australia CEO Inaki Berroeta said on a call with analysts.

TPG Executive Chairman David Teoh said in a statement the company was “very pleased with the Federal Court decision” although it still needed shareholder and other regulatory approvals.

The ruling is a blow to the ACCC which had decisions to block some of the country’s biggest M&A deals of recent years overturned by courts, including the TPG-Vodafone deal, Reuters reported.

“Australian consumers have lost an opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,” ACCC Chairman Rod Sims said in a statement.

The regulator has a month to lodge an appeal. Rod Sims added the regulator was considering the judgment.

The ACCC had argued TPG may yet build a 5G network – without Huawei parts – if it had no other option. TPG had ruled out revisiting the network on grounds that other parts suppliers were too expensive.

Telstra CEO Andy Penn declined to comment on the effects of competition with TPG in the 5G market.

Murray King, chief financial officer of SingTel-owned Optus, said on an earnings call the company would see how the merged entity looks to drive their operations and how they go to market.