TPG share price: where next after the ACCC says it won’t appeal merger

'It is not for the ACCC or this court to engineer a competitive outcome,' Justice John Middleton said when initially handing down his decision on the TPG-Vodafone merger last month.

For TPG Telecom, it looks like we are now living in the second best possible world.

The best possible world of course would be one where the Australian Competition and Consumer Commission (ACCC) never opposed TPG’s proposed merger with Vodafone to begin with; but I digress.

Today the ACCC announced that they would not be appealing the Federal Court’s decision to allow the TPG-Vodafone merger to proceed.

‘The ACCC has concluded that it does not have grounds for appeal, which would require the ACCC to establish an error of law by the judge,’ the Regulator said in a media release today.

Rod Sims, Chair of the ACCC further said that the department remains ‘disappointed by this outcome, which has closed the door on what we consider was a once in a generation chance for increased competition in the highly concentrated mobile telecommunications market.’

Equity markets were anything but disappointed mind you: the TPG Telecom (ASX: TPM) share price was bid ~8% higher today – to $8.13 per share; while the Vodafone Hutchinson Australia (ASX: HTA) share price climbed 13%.

Moreover, as the Australian Financial Review's Chanticleer sharply wrote today:

‘This was not a case of a judge bereft of scepticism playing into the hands of oligopoloists. It was a case of an out-of-touch regulator trying to engineer a commercial outcome that could not survive court room scrutiny.’

For the merger to be fully finalised, a number of additional conditions must still be met, TPG noted in a media release last month, including 'approvals from other regulatory bodies, the Federal Court and TPG Telecom shareholders.’

TPG & Telstra share prices: winner takes all

Analysts had previously noted that should the ACCC appeal the Federal Court’s decision to allow the merger to go ahead, it would naturally be to Telstra’s benefit – given that it would allow Australia’s largest telco to further build-out its lead in the 5G space.

Indeed, while TPG-Vodafone is in a substantially better position as a merged entity, Telstra remains the dominant force in Australia’s telecommunications market.

As it stands, analysts do indeed favour Telstra over TPG.

Telstra currently has 10 Buy ratings, 3 Hold ratings and 3 Sell ratings; plus a 12-month price target of $3.94, according to Bloomberg Data.

By comparison, TPG has just 3 Buy ratings and 8 Hold ratings, against a 12-month price target of $7.86, according to Bloomberg Data.

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