The $15 billion TPG Vodafone merger is going ahead, subject to shareholder approvals after the ACCC said it will not appeal the Federal Court’s recent decision to greenlight the deal.
In a significant loss for the Commission, the court said the proposed merger between TPG Telecom and Vodafone Hutchison Australia would not substantially lessen competition.
Investors applauded the news, sending the shares up 9.5% to $8.25.
“The ACCC has concluded that it does not have grounds for appeal, which would require the ACCC to establish an error of law by the judge,” the Commission said in its statement.
“The ACCC remains disappointed by this outcome, which has closed the door on what we consider was a once in a generation chance for increased competition in the highly concentrated mobile telecommunications market,” ACCC Chair Rod Sims said in a statement yesterday.
“The future state of competition without a merger is uncertain. But we know that competition is lost when incumbents acquire innovative new competitors.”
“Despite this outcome, we will continue to oppose mergers that we believe will substantially lessen competition, because it’s our job to protect competition to the benefit of Australian consumers,” Mr. Sims said.
The decision came the same day as TPG revealed a moderate interim result, but a higher dividend to encourage shareholders, including the executive chair, David Teoh and his biggest supporter, Washington H. Soul Pattinson.
TPG upgraded earnings forecasts for the full year. Revenue for the half rose 0.9% to $1.25 billion.
Net profit more than doubled to $144 million.
The result for the previous corresponding period in 2018-19 was adversely impacted by a $227.4 million pre-tax impairment expense arising from the cessation of the Australian mobile network build.
Excluding the impairment, net profit for the first half of 2019-29 was down by 30% because of $53.7m of Australian spectrum amortisation affecting 1H20, and a $19.6m increase in net financing costs due primarily to the end of interest capitalisation associated with the Australian mobile network.
TPG Telecom said it is now forecasting financial year earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $775 million and $785 million, up from the previous forecast of between $735 million and $750 million.
A fully franked interim dividend of 3 cents a share will be paid, up from 2 cents a share a year ago.
