If the merger is blocked, the entire sector will be trashed once more. Players in a struggling sector with pressure from the government-owned player and decreasing margins can't be expected to roll out new mobile networks.
The ROI just isn't there in a country with 25 million people imo. Telstra is still dominant, and the best way to challenge that is 3 strong players -- not 2 strong and 2 weak ones. Edit: also, I think you jumped the gun on selling. This will probably go high $7 or even low $8 again by March.