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Vodafone wins legal battle for A$10.9b Australia merger with TPG Telecom

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Australia's federal court approved a planned A$10.9 billion (S$10.18 billion) merger of Vodafone Group plc's local business and phone company TPG Telecom Ltd, overturning opposition by the competition watchdog.

[SYDNEY] Australia's federal court approved a planned A$10.9 billion (S$10.18 billion) merger of Vodafone Group plc's local business and phone company TPG Telecom Ltd, overturning opposition by the competition watchdog.

The Australian Competition and Consumer Commission (ACCC) had argued that as a standalone business, TPG might well invest in a new cellular network. The company was Australia's last chance to challenge incumbent giants Telstra Corp and Optus, owned by Singapore Telecommunications Ltd, the ACCC said.

In a ruling in Melbourne on Thursday, Justice John Middleton rejected that argument, saying the "proposed merger would not have the effect, nor be likely to have the effect, of substantially lessening competition."

Vodafone Hutchison Australia - a venture between Vodafone's Australian mobile-phone division and CK Hutchison Holdings Ltd - said the merger with TPG should now be completed by the middle of this year, subject to any appeal. The ACCC said in a statement it was "carefully considering" the judgment.

Shares in TPG surged 11 per cent in Sydney. Hutchison Telecommunications (Australia) Ltd, home to CK Hutchison's stake in the venture with Vodafone, jumped 18 per cent. Telstra lost 1.6 per cent.

ESSENTIALLY WORTHLESS

The ruling gives Vodafone a fresh chance to salvage something from an unprofitable Australian business that some analysts had written off as essentially worthless.

The proposed deal to create a technology giant selling mobile-phone and broadband services was blocked by the regulator in May.

TPG had indeed been investing in a new cellular network. But it ditched the plans early last year, a few months after the proposed deal with Vodafone was announced. TPG cited Australia's ban on Huawei Technologies Co from providing latest-generation mobile networks for the decision to scrap the rollout of a new network.

TPG, Justice Middleton said, was "extremely unlikely" to build a mobile-phone network. "That moment has passed," he said.

Responding to the ruling, ACCC chairman Rod Sims said Telstra, Optus and Vodafone controlled almost 90 per cent of Australia's mobile telecommunications market.

"Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services," Mr Sims said in a statement.

BLOOMBERG