On Wednesday, the 8th of May 2019, the Australian anti-trust watchdog had clogged an $11 billion merger between Vodafone’s Australian business, Vodafone Australia headquartered in North Sydney and TPG telecom, on competition grounds, eventually nudged the share prices of both of the firms involved.
Blocking the prospects of combining Vodafone’s mobile network and TPG’s fiber, the Australian Competition and Consumer Commissions (ACCC) had rejected a merger deal as beforementioned between the third- and fourth-largest Australian telecom businesses, saying that it would reduce rivalry on the sector as a whole.
TPG has a low-cost internet business in Australia, while Vodafone runs a mobile networking business in a joint venture with Hutchison Telecommunications Ltd., however, was reported to be struggling on Hutchison’s reliability, a merger between TPG and Vodafone Australia could have unearthed an entire monopolization on Australian telecommunication business, the ACCC said.
Although, both of the companies had been quoted saying on separate statements that they would be contesting the decision, an appeal would unlikely to succeed, given Australia’s contracted telecommunication sector amid heaping pressure on growth plans of the industry giants, heavily dependent upon Chinese exports.
Followed by reveal of the unexpected decision from ACCC, stocks had reacted terribly with steep sell-offs, as TPG shares witnessed its five-month low, losing over 15 percent its of market cap, while Hutchison dropped 28 percent, to its lowest figure since last February.