Australia’s competition watchdog on Thursday announced that it will not stand in the way of TPG’s planned takeover of iiNet, but warned that any future moves towards consolidation in the fi xed broadband space may be blocked.
After a short bidding war, broadband provider TPG Telecom agreed to pay A$9.55 (€6.24) per share for rival iiNet earlier this year, giving it an enterprise value of around A$1.9 billion (€1.2 billion). The deal comprises A$8.80 per share in cash plus a A$0.75 special dividend. iiNet shareholders voted in favour of the deal in July.
Having examined the proposed transaction, the Australian Competition and Consumer Commission (ACCC) said it "will not oppose" the deal, despite the fact that iiNet and TPG are two of the five largest providers of fixed broadband in Australia.
"However, the ACCC has noted the growing consolidation in what will now become a relatively concentrated broadband market," said ACCC chairman Rod Sims, in a statement.
"Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns," he added.
Sims admitted that the ACCC was concerned about the reduction in competition in the retail fixed broadband market, but concluded that the strength of the other three players – Telstra, Optus and M2 – would be sufficient to mitigate any issues.
M2 did battle with TPG for iiNet, but ultimately lost out.
The ACCC also looked at the market for wholesale transmission services and concluded that it would not be seriously affected by the deal.
However, "any future acquisition that would remove an important independent supplier in the wholesale transmission market will…face very close scrutiny," Sims said.
