The Australian Competition and Consumer Commission (ACCC) opposed a proposed merger between Vodafone Hutchison Australia (VHA) and TPG Telecom, on the grounds it would likely substantially lessen competition in mobile services.

ACCC chair Rod Sims said in a statement: “Given the longer-term industry trends, 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. It has previously stated this and invested accordingly.”

He added TPG is the best prospect Australia has for a new mobile network operator to enter the market and “this is likely the last chance we have for stronger competition in the supply of mobile services”, as blocking the merger would boost the chances of TPG resuming construction of its own mobile network.

“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, offering cheaper mobile plans with large data allowances and competing strongly against incumbents Telstra, Optus and Vodafone,” Sims explained.

VHA and TPG are planning a legal challenge to the decision, Bloomberg reported.

Market concentration
The competition watchdog noted Australia’s mobile market is already highly concentrated, with Telstra, Optus and Vodafone holding more than an 87 per cent share. In the fixed broadband sector, Telstra, TPG and Optus have about an 85 per cent share.

TPG halted deployment of mobile infrastructure in January, after the government effectively banned its equipment supplier, Huawei, from being involved in 5G rollouts in the country.

The operators announced their plan to merge in late August 2018, but required the approval of the ACCC and Australia’s Foreign Investment Review Board. The ACCC postponed its decision three times, with the latest delay in January due to not receiving requested information from the two operators.

VHA held a 19 per cent share of Australia’s connections (excluding cellular IoT) at end-March, behind Telstra (50 per cent) and Optus (31 per cent), data from GSMA Intelligence showed.