Vodafone's $7.7 Billion Australia Merger Blocked by Regulator

A planned $7.7 billion merger of Vodafone’s struggling Australian business with TPG Telecom was blocked by the regulator, according to Bloomberg.

The proposal would “substantially lessen competition“ for mobile-phone services in an already concentrated market, the Australian Competition and Consumer Commission said in a statement Wednesday. TPG is Australia’s best and probably the last chance to gain a new cellular network operator, ACCC Chairman Rod Sims said in the statement.

A protracted legal battle between the companies and the regulator now looms. TPG and Vodafone Hutchison Australia, Vodafone’s unprofitable mobile-phone venture with CK Hutchison Holdings, said they’re still committed to a union and will challenge the ACCC’s decision in the Federal Court.

Hanging in the balance is a proposal to create a new Australian tech giant selling mobile phone and broadband services that’s worth an estimated A$10.9 billion. If the deal is blocked, former Australian phone monopoly Telstra and Optus, owned by Singapore Telecommunications, would only gain more power, TPG said. The ACCC’s decision must be challenged, it said.

The watchdog’s decision also scuppers Vodafone’s plan to breathe new life into a mobile-phone partnership that has struggled to make inroads in Australia. In almost a decade of operations, Vodafone Hutchison won only 19 percent of the local mobile-phone market. Nicknamed Vodafail by some, the venture struggled to overcome a reputation for patchy coverage and dropped calls.