Low-cost mobile phone plans could soon be a thing of the past, it has been claimed, following the announcement that Vodafone and TPG plan to merge to create a super telco.
According to IBISWorld, the $15 billion merger of Australia’s third and fourth-largest telcos, respectively, would slash Australia’s mobile networks from four to three, and kill off $9.99 mobile phone plans.
“Vodafone is currently the third-largest mobile network operator, with approximately 6 million customers, while TPG holds the second-largest fixed line network in Australia. The combined entity is expected to continue investing in both fixed line and mobile networks, with the aim of delivering faster services and more competitive offerings to more customers,” IBISWorld senior industry analyst Tommy Wu said.
“Prior to the merger, Australians have had the choice of three providers in both mobile and broadband markets, with Telstra and Optus being the major providers and TPG and Vodafone rounding out the big three in the respective fixed line and mobile markets. As a result, the operating and competitive landscape of these markets are not projected to change significantly with the merger.”
Mr Wu said there were feasibility question marks over having a fourth mobile network in a country as small, population wise, as Australia.
“The merger will likely help alleviate this concern as TPG combines their fibre network and capacity with Vodafone’s mobile network to capitalise on opportunities presented by 5G services,” he said.
Nevertheless, prices would likely suffer, Mr Wu claimed.
“In order to avoid competition between the two brands, TPG’s aggressive discounting to push for new customers in the mobile market is likely to end, particularly $9.99 unlimited mobile plans,” he said.
However, the merger is by no means a done deal, with the ACCC embarking on a review process that take at least 12 weeks.
“The ACCC will be investigating the joint venture arrangements to see if they raise competition concerns under the Competition and Consumer Act,” the regulator said in a statement.
“The review will look at competitive impacts in mobile services, where TPG now has a growing presence, and also fixed line, where Vodafone is a discounter. We will also explore likely impacts in related markets, such as spectrum acquisition markets, wholesale services, and mobile roaming. We will be calling for submissions from stakeholders.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.