Ann: TPG acknowledges ACCC decision, page-34

I think the time is up for Rod Simms. This ridiculous decision combined with the unforgivable blunder yesterday has sealed his fate. He will exit ACCC in the near future after the new federal government is sworn in.

The past 2 chairmen of ACCC served for a total of 8 years each.

Allan Fels from 1 July 1995 – 30 June 2003 (8 years)
Graeme Samuel from 1 July 2003 – 31 July 2011 (8 years)

And Rod Simms has served since 1 August 2011 (over 8 years and counting)

What's the point of conducting a prolonged assessment of the merger when he already has a rejection already predetermined in his mind from the very beginning? He should have rejected the merger back in December 2018. At least that way, TPG & VHA could start the court proceeding a lot earlier.

Also, if Rod Simms really want TPG to succeed in becoming a viable mobile player, it should have declared national roaming when it had the chance to. I find it hard to understand ACCC's logic in this matter, on one hand it wants TPG to succeed, but on the other hand, it's making TPG's life unnecessarily difficult.

But at the end of the day, the rejection is the reality, we just have to accept it, no point in sulking over it. I believe TPG & VHA's case is very strong and will eventually win in the federal court. It's just a shame that we have to waste more time and resources before this decision is overturned.

In the mean time, TPG's existing businesses are still doing relatively well:

- Corporate is growing nicely, with expanding margin. There is no reason why Corporate can not continue to grow in high single digit for the foreseeable future. Its products and pricing are simply a lot more attractive than the competition's.

- Consumer business will continue to struggle until a new government in Canberra comes in and use this as an opportunity to undo some of the mistakes of NBN and earn brownie points with the electorates.

- If we assume that TPG & VHA eventually merge, then all of the writedowns of mobile assets & spectrum taken by TPG at the moment, will not be completely wasted, as future profits will be inflated due to the moving forward of amortisation to the current period.

- No matter what happens to its own mobile project, TPG will also continue to participate in the growth of VHA mobile business through its dark fibre agreement and its spectrum joint venture.

- Singapore mobile project is still proceeding well, TPG has recently expanded its trial to 200,000 users. It still has another 6 months to go before the 12 months free trial period ends. Online forum in Singapore has been discussing TPG's offering since December 2018, people are helping each other to fix various setup problems. All of these were achieved with minimal marketing budget and support services.

- Australia could have enjoyed what Singaporeans are currently enjoying but unfortunately it's not meant to be.

- The silver lining in this ACCC debacle is, the longer the delay, the larger the size of the potential special dividend. TPG is still generating a lot of free cashflows, especially now that it's stopped its mobile capex. There is only one more 700MHz spectrum installment to pay and 50% of the 3.6GHz spectrum which will be due in 2020.

I have decided to hold my current investment in TPG, and will continue to monitor. My original investment thesis in TPG has morphed into something completely different, one that is subject to considerable regulatory risks. I'm not comfortable with this fact but at the moment I still believe that it will work out OK in the end.