Vodafone and TPG merger: What it means for you

Phone and internet customers could see cheaper and better services roll out in Australia after Vodafone Hutchison Australia and TPG Telecom were today finally given the green light to merge, analysts say.

The Australian Competition and Consumer Commission's move to block the merger was this morning rejected by the Federal Court.

The $15 billion merger will allow the new combined force of Vodafone and TPG to become a stronger competitor to the two larger telcos Telstra and Optus.

The ACCC has argued the merger will reduce competition as TPG could become the nation's fourth mobile operator by building its own network.

TPG has previously moved to build a mobile network but dumped the venture after the government banned Huawei from supplying equipment in 5G networks.

TPG argued the ban on Huawei means to can no longer afford to build a competitive network.

Justice John Middleton rejected the ACCC's argument that the merger would "substantially lessen competition".

He also said TPG was unlikely to try to build a mobile network anytime soon.

Telco comparison website WhistleOut's spokesman Joseph Hanlon said the merger would "create a compelling alternative to Telstra and Optus".

"This could result in them expanding Vodafone's mobile network further into regional areas and building a fast 5G network designed to compete head-to-head with the NBN," he said.

"If nothing else, we should see really competitive pricing that will have consumers thinking twice before signing up with the other major providers."

Mr Hanlon said the "ripples" of the merger would be felt across the telco and internet market and result in "big wins for consumers".

"There are plenty of other flow-on effects that may result from an increase in competition, like the smaller telcos pumping up the value in the phone plan offers, to cheaper NBN plans as 5G technology muscles in on the home internet segment," he said.

"We see the Vodafone TPG merger paving the way for better, cheaper phone and internet services for all Aussies."

Vodafone's Australia boss Inaki Berroeta said today's result allowed further investment in next generation networks including 5G.

"This market in the past had players that were converging in the sense they were offering a full telecommunications solution," he said.

"This merger bringing TPG and Vodafone brings together all the spectrum and a lot more certainty there will be a strong 5G player in the market.

"In the real world when it's a matter of having people who can deliver a similar level of service … with only two 5G players it doesn't look good but now we have confirmation there will be three strong 5G players and that ultimately means more choice for customers."

He said for Vodafone customers it meant that would have access to 5G earlier and they would also welcome new customers.

Mr Berroeta said their telco plans would be progressed and customers would be kept informed of any progress and the Vodafone, TPG and iiNet brands would all remain post the merger.

However ACCC's Mr Sims said Australian consumers "have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services".

"Mobile telecommunication services are integral to Australia's social and economic future and Telstra, Optus and Vodafone already control almost 90 per cent of the market," he said.

"There is clear evidence that consumers pay more when markets are concentrated.

"The ACCC's concern was that with this merger, mobile data prices will be higher than they would be otherwise. These concerns were reinforced by statements from the industry welcoming the merger and the consequent 'rational' pricing."

Mr Sims said he had no regrets in opposing the merger.

Amaysim chief executive officer Peter O'Connell also welcomed the merger and said "the Australian mobile market has long been dominated by Optus and Telstra".

"We believe that the merger will create a more sustainable market with three strong mobile network operators in Australia that can build excellent 5G networks, benefiting consumers," he said.

The merger will allow Vodafone to accumulate valuable 5G mobile spectrum owned by TPG.

The scheduled merger should be complete by mid this year pending remaining regulatory and shareholder approvals and whether there's an appeal by the ACCC.

The ACCC has 28 days to lodge an appeal.

sophie.elsworth@news.com.au

@sophieelsworth