An alternative model to the proposed TPG-Vodafone merger

The ACCC has blocked the $15bn merger between TPG and Vodafone, citing its belief that a merged entity would reduce competition given TPG’s ability to become a fourth mobile operator

TPG and Vodafone intend to appeal the decision and have extended their merger agreement to 31 August 2020

Venture Insights believes there is an alternative model which would enable infrastructure efficiencies and benefit competition

Four potential options for TPG in the event of a no merger decision

On 7 May 2019, the ACCC announced that it had opposed the merger between TPG and Vodafone (VHA) citing the following key reasons:

  • Australia has a very concentrated mobile services market

  • TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices

  • Vodafone has likewise felt the need to enter the market for fixed broadband services

  • TPG has the capability and commercial incentive to resolve the technical and commercial challenges it is facing.

  • TPG is also facing reducing margins in fixed home broadband due to the NBN rollout and there is a growing take-up of mobile broadband services in place of fixed home broadband services

  • The ACCC concluded that the proposed merger between TPG and Vodafone is likely to substantially lessen competition in the supply of mobile services because the proposed merger would preclude TPG entering as the fourth mobile network operator in Australia

Shortly after the ACCC decision, both TPG and Vodafone announced that they will contest the decision in the Federal Court and have extended their merger agreement to 31 August 2020..

“This article is an extract of a report published by our sister company Venture Insights. To enquire about becoming a subscriber, please contact Nigel Pugh.”