TPG Telecom Limited (ASX: TPM) has received a green light from the competition regulator for its takeover of competitor iiNet Limited (ASX: IIN).
The Australian Competition and Consumer Commission (ACCC) today announced that it would not oppose TPG's takeover of iiNet.
ACCC Chairman Rod Sims said,
"While the ACCC was concerned that the acquisition of iiNet by TPG may lessen competition in the retail fixed broadband market, the ACCC concluded that this would not reach the threshold of a 'substantial' lessening of competition as required under section 50 of the Competition and Consumer Act."
The ACCC also said that competition from other major retail fixed broadband suppliers, Telstra Corporation Ltd (ASX: TLS), Optus and M2 Group Ltd (ASX: MTU) would be sufficient to limit the harm from the merger.
You can probably rule out any further mergers between the 'big four' (Telstra, TPG/iiNet, Optus & M2), with the ACCC saying that would 'raise serious competition concerns'.
The regulator also said it took into account the role of non-vertically integrated suppliers of wholesale transmission services.
"Any future acquisition that would remove an important independent supplier in the wholesale transmission market will therefore also face very close scrutiny," said Mr Sims.
That probably rules out one of the big four acquiring a broadband supplier like Vocus Communications Limited (ASX: VOC) – although TPG likely owns around 10% of Vocus post its acquisition of Amcom, having acquired 20% of Amcom in an effort to block the merger. But it could leave open a window for microwave wireless broadband supplier BigAir Group Limited (ASX: BGL) or satellite broadband provider Speedcast International Ltd (ASX: SDA) to be acquired.
TPG may even have ambitions of becoming a fully integrated telecoms company with a mobile network which could mean a closer look at Vodafone's network, or a possible takeover of Hutchison Telecommunications (AUS) Ltd (ASX: HTA). Hutchison owns 50% of Vodafone – as we outlined here.
That for the future of course. Now, TPG Telecom boasts 1.7 million broadband subscribers, revenues of around $2.3 billion and earnings before interest, tax, depreciation and amortisation of circa $654 million. The combined company will also have more than 60,000 NBN subscribers. That's behind giant Telstra, but ahead of Optus, with M2 Group bringing up the rear.
TPG is expected to retain the iiNet brand – although iiNet has several brands including Internode, TransACT, Adam Internet and Westnet as well as iiNet.
But the big question is – has TPG Telecom finished? I don't think it has.
