Thursday, 09 May 2019 04:13

Telstra mum, Optus guarded in response to ACCC merger move Featured

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Telstra mum, Optus guarded in response to ACCC merger move Pixabay

Australia's biggest telecommunications provider Telstra says it has no comment on the decision by the Australian Competition and Consumer Commission to oppose the proposed merger of TPG Telecom and Vodafone Hutchison Australia.

Asked for comment on the ACCC decision, a Telstra spokesperson told iTWire: "We will politely decline to comment on this decision."

The ACCC said on Wednesday that it would be opposing the proposed merger. The announcement, a day before it was scheduled to be made, was due the inadvertent publication of the information on the ACCC mergers register online briefly. The watchdog is conducting an investigation to find out how this occurred, but indications are that it was caused by a technical glitch.

Later on Wednesday evening, Vodafone and TPG said they would be contesting the ACCC's decision in the Federal Court.

Asked for its reaction, the second biggest telco, Singtel Optus, was a little more forthcoming than Telstra, though it did not mention the word "merger" in its response.

Optus vice-president, Regulatory and Public Affairs. Andrew Sheridan, said: "Optus supports competition in the mobile market. We believe consumers want coverage and value.

"That is why Optus will continue to invest in our premium national network, to deliver exceptional value, must-have content and great service for customers. We will also continue to prioritise our 5G leadership."

As usual, it was left to a much smaller player, this time from the ISP sector, to offer detailed comment.

Damian Ivereigh, chief executive of Launceston-based ISP Launtel, and a regular commentator in these columns, said after reading the ACCC's media release, he could understand the reasoning it had employed in coming to this decision.

"The argument put forward by the proponents is that a merger allows two smaller players to have a chance of taking on the bigger ones. The one put forward by the ACCC is that the merger itself lessens competition because those two smaller players should be forced to compete in their own right," he said.

"While TPG has said it has pulled out of mobile (due to the Huawei 5G ban), it is unclear if another motivation was they wanted to demonstrate to the ACCC that they were not interested in building out their own mobile network any longer."

Ivereigh said the ACCC had probably decided that from the competition point of view, there was likely to be little gained either way, but had decided that the risks to competition if it was allowed to go through were too great for that little gain.

"This is a very consolidated, non-competitive market already (both in the NBN and the mobile infrastructure markets) and the ACCC has little interest in making things worse," he said.

"For the two companies involved, the big advantage of a merger is the ability to cross-subsidise between mobile and NBN. Margins are still falling in the NBN space and the two biggest companies are probably only surviving by bundling the low-margin NBN services with the higher margin mobiles. You will note that Vocus has all but pulled out of the NBN retail market because it doesn't own a mobile network."

Ivereigh said from the competition point of view, the ability to cross-subsidise made it harder for other companies, which did not own a mobile network, to compete in the NBN space.

"I will watch with interest to see if TPG restart their mobile network build (unlikely) and/or start raising their NBN prices," he said. "The other question is will Vodafone start exiting the NBN space? The only advantage to Vodafone of staying in the NBN space is that ability to bundle, but it comes at the cost of making little or no money on those NBN services."

iTWire also approached Aussie Broadband for its reaction but the company said it had no comment to offer.

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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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