The Federal Court has reversed a ruling by the ACCC, and the Vodafone and TPG merger can proceed. But what does this mean for Australians and what is the future of the so-called ‘fourth’ network (well now three really).
The ACCC, headed by corporate bulldog Rod Simms (got to love someone who is on our side) felt the proposed Vodafone and TPG merger would harm consumers – for oh, so many reasons.
Simms said (and we concur)
“We stand by our decision to oppose this merger. If the ACCC won 100% of the cases we took it would be a sign we weren’t doing our job properly; by only picking ‘safe’ cases and not standing up for what we believe in.”
“We will continue to oppose mergers that we believe will substantially lessen competition because it’s our job to protect competition and, in doing so, ensure that Australian consumers enjoy the benefits of competition,”
Why the ACCC acted as it did? (in our interests)
The ACCC felt that Vodafone was gradually stepping up to be a viable competitor with Telstra and Optus anyway and that TPG’s main area was the internet (that was an NBN reseller anyway).
And TPG CEO David Teoh had already crowed that it was building a 4G network and would enable greater competition. Alas, that network was predicated on cheap Huawei equipment and won’t be proceeding (if it ever was!)
Those of you that know the name TGP will recall it came from the grey/parallel market/importer of computer parts – Total Peripherals Group. It was established in 1986 by Malaysian born and highly secretive David Teoh. Those that know say TPG had quite shady beginnings.
It got out of that business in 2007 by buying Adelaide internet provider Chariot (and later other ISPs).
Vodafone and TPG merger – what does it really mean?
First some history.
Vodafone Hutchinson Australia is the result of a 2009 merger between Vodafone Australia and Hutchinson 3G Australia. Don’t be fooled by the words Australia. The joint venture entity is owned by Hutchison Telecommunications Australia (a subsidiary of international CK Hutchison Holdings) and by global Vodafone Group plc on a 50-50 basis. That merger was approved by the ACCC to create a ‘third’ network.
It offers 3/4G services to a limited Australian area, primarily in capital cities. It resells NBN. It had a very rough time between 2009-2012 when it was known Vodafail losing more than two million customers in that period.
Vodafone Group and Hutchison Telecommunications Australia will own a combined 50.1% of TPG Telecom Limited and Teoh 49.9%.
A statement from Boost Mobile founder Peter Adderton puts some industry perspective
The dynamic of the Australian telecommunications industry has changed permanently with the TPG-Vodafone merger.
The ACCC fight was to keep a fourth network (TPG) that never actually existed. It was a vague promise by TPG, but its intention was never to go through with a network build.
Teoh is the ultimate telco poker player, who played the game masterfully and got what he needed. He will want more control of this combined business, and I don’t see Vodafone having any appetite for opposing that.
The sad part of today’s decision is the opportunity that the ACCC had to put some conditions around the merger. Conditions to help protect MVNOs (Mobile Virtual Network Operators). They will now collectively be the fourth virtual network.