The Australian anti-trust regulator has given the green light to the proposed merger of Vodafone and Hutchison’s Australian mobile operations, after concluding that it is unlikely to affect competition in the country’s mobile market. The conclusion came at the end of a three month investigation by the Australian Competition and Consumer Commission (ACCC), which had originally said that “the proposed merger raises competition concerns in the short to medium term within the mobile telephony and MBB [mobile broadband] segments of the national market.” However, in a decision published today, the regulator noted the “increasing need for mobile network operators to have sufficient scale to be able to continue to make significant investments in their network capabilities” and ruled that the parties would be unable to sustain the required investment if they remained as separate entities. A key consideration in the ACCC’s investigation was whether increased concentration in the mobile sector would result in reduced pricing pressure for retail mobile services, ruling that, without the merger, the parties “would not sustain vigorous price competition in the longer term.”
Announced in February this year, the merger aims to create an operator with 6 million customers and combined total revenues of approximately AUS4 billion (US$2.7 billion). The new company will be renamed VHA (Vodafone Hutchison Australia) but is expected to market its products and services under the Vodafone brand. Vodafone and Hutchison are the third- and fourth-largest mobile operators in the country, respectively, and the merger is a strategy by the two operators to better compete with the country’s two larger mobile operators, Telstra and Optus.