Friday, 14 February 2020 10:22

Telcos have to be big to survive: Budde on TPG-Vodafone outcome Featured

Paul Budde: "I do think that we very soon will see some interesting bundling packages on offer from the combined entity." Paul Budde: "I do think that we very soon will see some interesting bundling packages on offer from the combined entity." Supplied

Well-known telecommunications consultant Paul Budde has underlined a fundamental truth about the market in his reaction to the Federal Court's decision to clear the Vodafone-TPG merger: "You have to be big in the telecoms market to survive."

Budde told iTWire in response to a query that the merger would give the new entity the size it needed to compete both in the fixed and mobile telecoms market.

The court decision was revealed on Thursday, with Justice John Middleton agreeing to the plea by Vodafone Hutchison Australia and TPG Telecom, who were contesting a decision by the Australian Competition and Consumer Commission.

TPG announced in January 2019 that it was cancelling plans for a mobile network due to the Australian Government ban on the use of equipment from Chinese vendor Huawei Technologies.

The proposed merger was announced on 30 August 2018, with the scrip deal creating a company with an enterprise value of about $15 billion.

The ACCC announced on 8 May 2019 that it would be opposing the merger. Both firms said the same day that they intended to challenge the decision in court.

Budde said it was, of course, a pity that Australia could not have four strong competitors in the market and that he understood why the competition watchdog was frustrated at the outcome.

"However market and industry reality dictates that Vodafone and TPG, each on their own, are not strong enough to provide sustainable long-term competition to Telstra, Optus and NBN Co (and Google, Facebook, etc)," he said.

While some have said that the merger, which is expected to be completed by mid-year, will not be much of a positive for consumers, Budde was optimistic.

"While I don’t expect any dramatic changes in the market (eg. no price war), I do think that we very soon will see some interesting bundling packages on offer from the combined entity as they now have the capability to bring such new products to the market."

But he added there was one big caveat: "Any merger totally depends in its successful execution."


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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