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Aussie competition regulator opposes the formation of a super-telco

Editorial Staff

The Australian Consumer and Competition Commission (ACCC) has issued a notice opposing a "merger" proposal involving TPG Telecom Limited (TPG) and Vodafone Hutchison Australia Pty Ltd (Vodafone). The reasons include that TPG has been "disruptive" in a complacent market and is "the best prospect Australia has for a new mobile network operator to enter the market." But it's a far more complex picture than that.

TGP had raised a lot of money for this deal on the understanding that there would be considerable benefits: redundant and duplicated tech would be the first to go but, more importantly, the company would not be duplicating spending on R&D in particular to 5G. The investors / shareholders would own 55% of the new company (hence why it's not a merger: VHA's share would be diminished by this course of action - and the senior officers would, in large part, come from TGP.

TPG has invested heavily in cable broadband despite the deep mess created by successive failures of the government over its so-called "National Broadband Network." It is that investment that, in part, caused the ACCC to reject the proposal. "TPG has the capability and commercial incentive to resolve the technical and commercial challenges it is facing, as it already has in other markets. TPG already has mobile spectrum, an extensive fibre transmission network which is essential for a mobile network, a large customer base and well-established telecommunications brands." said Rod Sims, Chairman of the ACCC. That seems very close to micro-managing a company and telling it how to spend its money. Sims' argument was based on this reasoning: "TPG has a proven track record of disrupting the telecommunications sector and establishing itself as a successful competitor to the benefit of consumers. TPG is likely to be a vigorous and innovative supplier of mobile services in Australia, offering cheaper mobile plans with large data allowances, and competing strongly against incumbents Telstra, Optus and Vodafone."

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