But as the merger would spell an end to TPG's plans to build a fourth national mobile network in competition with Telstra, Optus and Vodafone - long welcomed by Australian Competition and Consumer Commission (ACCC) chairman Rod Sims as a good outcome for customers - some industry members had concerns the deal might be blocked by the regulator, which was looking at the impacts on both mobile and fixed-line services. Loading Mobile prices have fallen despite rising data inclusions in plans as telcos fight to retain and attract new customers, with the rollout of the national broadband network (NBN) also putting pressure on the bottom line. Mr Sims said in a statement on Thursday TPG was "currently on track to become the fourth mobile network operator in Australia, and as such it’s likely to be an aggressive competitor". “We therefore have preliminary concerns that removing TPG as a new independent competitor with its own network, in what is a concentrated market for mobile services, would be likely to result in a substantial lessening of competition. If TPG remains separate from Vodafone, it appears likely to need to continue to adopt an aggressive pricing strategy, offering cheap mobile plans with large data allowances.” He said the regulator's preliminary view was that the merged company would not have the same incentives to operate in this way and competition would be reduced as a result. “A mobile market with three major players rather than four is likely to lead to higher prices and less innovative plans for mobile customers," he said. Mr Sims requested additional submissions about a new statement of issues by January 18, with a decision to be made by March 28. The regulator will further examine the impacts of removing Vodafone from the fixed broadband market. “Although Vodafone is currently a relatively minor player in fixed broadband, we consider it may become an increasingly effective competitor because of its high level of brand recognition and existing retail mobile customer base,” Mr Sims said. Loading “The ACCC is continuing to consider whether operators will need to offer both mobile and fixed broadband services in the longer-term to remain competitive, meaning that TPG and Vodafone will necessarily be closer competitors in the future,” he said. If the merger goes ahead, the board will include TPG directors Robert Millner and Shane Teoh, two nominees from Vodafone, two from Hutchison Australia and two independent directors. Mr Berroeta would be chief executive and Mr Teoh would take the chairman's role. The deal would see TPG shareholders owning 49.9 per cent of the combined telco, called TPG Telecom Ltd, and Vodafone shareholders with 50.1 per cent. Mr Teoh would own 17.12 per cent. In a statement, Mr Berroeta said the decision was not unexpected, with the business still confident the transaction would go ahead in the first half of 2019. The deal requires Federal Court, Foreign Investment Review Board and other regulatory approvals. “Customers will be the big winners of a proposed merger ... Increased investment requires increased scale, and the proposed merger will enable the merged entity to take competition in the market to the next level," he said. “The merged company will have significantly increased ability to invest in networks, new technologies, and competitive plans and products for Australian customers.” TPG chief operating officer Craig Levy said the regulator's decision wasn't a surprise as the companies had expected the deal to be a lengthy process due to the complexity of bringing the telcos together. "There are so many elements behind the scenes," he said. TPG and Vodafone have been working closely together in the months ahead of the merger. The two became a joint venture to buy licences for valuable radio wave spectrum, which is used to transmit mobile signals across the country. The auction finished earlier this month after a $263.3 million spend by the strategic pairing to get access to 3.6 GHz spectrum that will enable the telcos to launch ultra-fast 5G mobile networks in future, though the joint venture applies even if the corporate transaction does not go ahead. Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.
Australia’s competition watchdog raised concerns about Vodafone Australia and TPG Telecom’s AUD15bn ($10bn) merger plans. It said it wanted more details but the Australian Competition and Consumer Commission’s Chairman Rod Sims had earlier welcomed a TPG plan to build a fourth national network, a plan which would be abandoned if the merger went ahead. Vodafone Hutchison Australia said the delay was not unexpected and it was confident the merger, to create a new firm called TPG Telecom, would still go ahead early in 2019. At the news, TPG’s share price fell to its lowest level since the deal was announced.