ACCC says won't opposed Hutchison, Vodafone Aust merger
29 May 2009 5:20 PM
SYDNEY, May 29 AAP - The competition watchdog says it won't opposed the planned merger of the Australian mobile communications businesses of Hutchison Telecommunications (Australia) Ltd and Vodafone plc.
The Australian Competition and Consumer Commission (ACCC) said on Friday it had concluded the deal was unlikely to substantially lessen competition in the market.
Its decision follows a three month investigation during which it scrutinised a large number of internal company documents from the merger parties and their competitors.
The ACCC said it took note of the changing nature of the mobile telecommunications market and the increasing need for network operators to have sufficient scale to be able to able to continue to invest in their business.
It also considered evidence showing that if the merger did not go ahead, Hutchison and Vodafone's Australian arm would be unlikely to sustain such investment.
"Ongoing investments are needed to meet the increased customer demand for bandwidth-hungry data services, including mobile broadband," ACCC chairman Graeme Samuel said in a statement.
"In this respect, the ACCC considers that mobile voice and data services will continue to converge in the future."
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Hutchison welcomed the ACCC decision and said the merger was set to be completed within the next two weeks.
Under the deal, which was flagged in February, Hutchison, owner of the 3 brand, will join with the Australian arm of Vodafone plc to create a 50/50 joint venture company to be called Vodafone Hutchison Australia (VHA).
"Our first priority is to retain the best elements of both independent brands," Hutchison chief executive Nigel Dews said in a statement.
"The next step is to apply the combined scale and resources of VHA to deliver real benefits to all customers."
The merger is expected to generate cost synergies of about $2 billion.
VHA will have an estimated revenue of approximately $4 billion from some six million customers.
Under the deal, Vodafone will receive a deferred payment of $500 million from VHA, by way of a shareholder loan from Vodafone to VHA, to equalise the value differences between the companies.
The loan is expected to be repaid or refinanced with 18 months from the completion of the merger.
Vodafone Asia-Pacific & Middle East region chief executive and incoming chairman of VHA, Nick Read, said the combined group will be more competitive and "capable of providing an even better deal for customers."
The merger already had the approval of Australia's Foreign Investment Review Board and the European Commission, and Hutchison shareholders.
Initially, the ACCC was concerned the transaction might lead to increased prices in the mobile phone market due to less competition.
But the ACCC said on Friday it had concluded that was not a threat.
