ACCC SoI for TPG / Vodafone Merger, page-5

I don't think you can draw such conclusions on a potential takeover of AYS from ACCC's objections against the TPG/VHA merger. The envisaged reduction from 4 to 3 mobile networks (if that fourth network actually were in service) would have severe implications for competition as that directly reflects on the choice and availability of physical network infrastructure. AYS however does not have its own network but simply resells airtime on Optus' network - actually the entire MVNO business modell is fully dependent on competition on the infrastructure level, i.e. competing networks. Against that background I doubt that an acquisition of AYS with their 1.158 million customers representing only 6 per cent of Australian mobile subscribers would lead to a substantially lessening of competition - as long as it isn't Telstra bidding. Because AYS subscribers do exclusively use Optus' network AYS subscribers indirectly belong to Optus' market share.

Yes, AYS has the legal liberty to cancel the wholesale contract with Optus, switch network suppliers and migrate its customer base to Telstra or TPG/VHA. But does this hypothetical option really mean Optus and AYS do compete with each other? My feeling is rather that Optus and AYS form a symbiotic relationship where the earlier deliberately uses the latter as an efficient sales channel to certain target groups. That said I don't think that there would be competitive issues if Optus acquired AYS.

Actually the ACCC's concerns over lessening competition from MVNOs as a result of the TPG/VHA merger, could cause windfall for MVNOs like AYS. When in 2014 Germany's number 3 and 4 network operators (O2 Germany and E-Plus) merged, similar concerns by European authorities led to the obligation for the merged company to lease out 20 per cent of its network capacity (with an option for 30 per cent) to an existing MVNO, Drillisch AG (https://www.fiercewireless.com/europe/telefonica-grants-network-access-to-drillisch-to-secure-e-plus-merger-approval) who have been doing quite well since (see 5Y chart: https://finance.yahoo.com/quote/DRI.DE/chart?p=DRI.DE). So if the ACCC takes an example from their European counterparts TPG/VHA could be forced to open their joint network and leave market share to MVNOs like AYS.

By the way the ACCC is holding a public consultation on the merger and seeks comments from market participants to be submitted until 18 January 2019 to [email protected]