Optus worried about Vodafone/Hutchison merger

The proposed merger between telecommunications giants Hutchison and Vodafone has been approved by Hutchison shareholders, but rival Optus has raised red flags about the deal.

The telco will respond to a call from the Australian Competition and Consumer Commission for telcos to raise questions and concerns about the proposed merger.

Optus general manger of regulatory affairs, Andrew Sheridan, has told The Australian Financial Review that the merger may create problems with the hoarding of the mobile spectrum.

“The merged company will have a larger pool of [mobile spectrum] and they will have an incentive to hang on to it rather than sell it on the secondary market,” he said.

Sheridan also said that the merger could increase pressures in the mobile market.

“It’s not a good outcome if you have large amounts of existing spectrum held up and not being used as it could ultimately raise industry costs,” he said.

The concerns come after the ACCC released an issues paper on Wednesday that detailed key issues about the merger that would affect the mobile market.

“The ACCC’s preliminary view is that the proposed merger raises competition concerns in the short to medium term,” the paper says. “The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers.”

Telstra is not predicted to make any submission to the ACCC.

Meanwhile, the merger has passed its first major hurdle after being approved by Hutchison shareholders at a general meeting yesterday.

Shareholders voted overwhelmingly in favour for the merger, which will see the two companies merge under the name “VHA” and will give the new company six million customers and $4 billion in revenue.

“We are very pleased that shareholders have voted in favour of the proposed merger,” Hutchison group managing director Canning Fok said.

“The Foreign Investment Review Board and the European Commission have given their approval, and we will be responding to the statement of issues released by the ACCC yesterday, in particular our view that the merger will deliver more competition, more investment and a better deal for consumers.”

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