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Australian court backs A$15b Vodafone-TPG merger, overruling regulator
[SYDNEY] An Australian court on Thursday approved a A$15 billion (S$14 billion) merger between a local arm of Britain's Vodafone Group and internet provider TPG Telecom, overruling an earlier move by the antitrust regulator to block the deal.
The Federal Court ruled that the tie-up between Vodafone's local joint venture partner, Hutchison Telecommunications (Australia), and TPG would not harm competition.
That trumped last year's negative decision by the Australian Competition and Consumer Commission (ACCC) and revives a plan to challenge the dominance of Telstra Corp and Singapore Telecommunications's Optus in the Australian market.
"The proposed merger would not have the effect, nor be likely to have the effect, of substantially lessening competition in the supply of retail mobile services in Australia," Federal Court judge John Middleton said on Thursday.
"Accordingly ... the merger can proceed as contemplated," he added.
Hutchison shares surged 25 per cent, while TPG shares gained 15 per cent. Shares of Telstra, which dominates the Australian mobile and internet markets, had risen earlier on Thursday after it released its half-year earnings but fell following the court ruling. They were trading 2.4 per cent lower by late morning.
The ACCC, which has the right to lodge an appeal to the court ruling, said it was considering the judgment.
"Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed," ACCC Chairman Rod Sims said in a statement.
The ACCC had said the merger would discourage Vodafone, Australia's second-largest mobile phone company, from entering the internet market and discourage TPG from building a mobile phone network. TPG had started rolling out a network before Australia banned use of Huawei Technologies parts due to security concerns.
Vodafone Hutchison Australia (VHA) said the decision meant that "for the first time, Australia will have a third, fully-integrated telecommunications company".
"This will give us the scale to compete head-to-head across the whole telecoms market which will drive more competition, investment and innovation, delivering more choice and value for Australian consumers and businesses," VHA CEO Iñaki Berroeta.
Speaking on a call with analysts to discuss earnings, which was held at the same time as the court ruling, Telstra CEO Andy Penn said he was focused on Telstra's strategy.
"I can't control the regulators or those decisions," Mr Penn said before hearing the court's decision. "But I'm very comfortable with how we're positioned".