Well, the ACCC's decision to block the TPG-VHA merger will definitely contain competition and substantially weakens TPG, who started building a 4G network but in anticipation of the merger halted the roll-out and recently wrote down $227m (which splits up into $92m for the spectrum, $76m for network assets and other writedowns of $60m) in February. Given that they were exclusively using Huawei network equipment which has since been banned in Australia they would now be forced to switch vendors, were they to resume the roll-out, which means a huge delay and much of the $76m spent of Huawei hardware are gone anyways. TPG and VHA have already announced legal action against the decision but whatever the outcome is, it could play into our hands. Be it only by less competition or even VHA looking for an alternative to scale up the business, such like taking over AYS and stealing 1m customers from its direct competitor. In an alterantive scenario, which I've outlined before,TPG-VHA could come up with greater concessions to sooth competitive concerns by dragging AYS with its 1m customers onto their network. Giving an MVNO a very attractive wholesale agreement was how the O2/E-Plus merger in Germany secured approval.
AYS Price at posting:
68.5¢ Sentiment: Hold Disclosure: Held
