Vodafone flags mobile congestion, inability to compete if TPG merger doesn't go through

Vodafone flags mobile congestion, inability to compete if TPG merger doesn't go through

Files court proceedings against ACCC decision to stop merger to proceed

Credit: Vodafone

Vodafone Hutchinson Australia (VHA) has filed a statement of claim in the Federal Court of Australia in order to bypass the ACCC’s decision to block the merger with TPG. 

The claim, which was flagged by both VHA and TPG in early May, was filed on 24 May and it states that VHA's financial position is such that its ability to undertake an upgrade of its RAN that will address the growing congestion on the VHA Mobile Network is limited.

Moreover, the company said its shareholders have never been paid a dividend and if the acquisition does not go through, "VHA is unlikely to be in a position to pay a dividend" in five years, if ever.

The document filed in court seeks orders that the proposed merger will not have the effect of substantially lessening competition, as claimed by the ACCC. 

“We believe the merger will create an entity that can compete more aggressively in the mobile market and will increase our ability to invest in networks, new technologies, and competitive plans and products for Australian consumers,” a Vodafone spokesperson said on 24 May. 

VHA and TPG are working together to progress the proceedings and TPG supports the orders being sought in the application, the company said in a statement. 

In the Claim, VHA also said that if the acquisition does not go through its mobile network its likely to become increasingly congested, the quality and value of its retail and wholesale services are likely to decline.

VHA also argued that its competitors, Telstra and Optus, are unlikely to experience the same level of congestion, and lastly, its ability to compete successfully in the retail and wholesale mobile markets will decrease in five years.

The company said that while the ACCC investigations were ongoing it provider the consumer watchdog with 25,537 documents for review.

In May, the ACCC opposed to the proposed $15 billion merger between TPG and VHA. The information was inadvertently published online on the ACCC’s mergers register briefly on 8 May, with the ACCC later clarifying the reasons for the decision.

Ultimately, ACCC chair Rod Sims said that if the proposed merger does not proceed there is a real chance TPG will roll out a mobile network.

Soon after, both telcos announced plans to file legal action in response to the ACCC's decision.

At the time, VHA CEO Iñaki Berroeta said the company remains "firmly committed" to the merger.

“VHA respects the ACCC process, but we believe the merger with TPG will bring very real benefits to consumers. We have therefore decided that VHA should, together with TPG, pursue approval of the merger through the Federal Court," Berroeta said.

Meanwhile, TPG said at the time the news was disappointing as it has "committed significant resources to working constructively with the ACCC in relation to the application for informal clearance".

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