TPG Telecom announced its intention to buy rival iiNet on 13 March 2015, in a deal worth AUD $1.4 billion (US $1.065 billion). The proposed takeover would create Australia’s second largest fixed-line telecommunications company after Telstra, with the combined business to provide broadband services to over 1.7 million subscribers. Optus, which would become Australia's third largest fixed-line telecommunications company following the transaction, has just under 1 million retail fixed-line internet subscribers.
The Australian Competition and Consumer Commission (ACCC) immediately flagged that it will conduct a public review of the takeover, with a notice on the public register stating that it would be monitoring the proposed acquisition once both parties submit their proposals. Chairman Rod Sims explained that the ACCC would consider a number of issues, including barriers to market entry in the current market and into the National Broadband Network (NBN) era.
Greens Senator Scott Ludlum has strongly urged the ACCC to block the takeover, reminding the ACCC of its obligation to prohibit acquisitions would be likely to have the effect of substantially lessening competition in a market. However, initial reports indicate that the ACCC will more likely approve the deal on the basis that it will create a stronger competitor against market leader Telstra, which has 3 million broadband subscribers.
Once submissions are received from both parties, the ACCC will commence its public consultation. Market participants who wish to comment before this time may send correspondence to TPG-IINET-Merger@accc.gov.au.
For more information, please contact Anne-Marie Allgrove, Toby Patten or Jarrod Bayliss-McCulloch.