31 Oct 2012

Vodafone purchase of TelstraClear confirmed

4:35 am on 31 October 2012

Vodafone and TelstraClear will continue to operate as separate businesses over the next six months, after the Commerce Commission gave permission for the $840 million takeover.

The Commission says the deal does not substantially lessen competition.

With the acquisition of TelstraClear, Vodafone will have roughly of third of the market, and its chief executive, Russell Stanners says the tie-up won't distract it from challenging the market leader, Telecom.

The commission looked at the potential impact of the purchase in a number of markets.

These included provision of fixed line calling and broadband services to residential, as well as business customers, mobile phone services and spectrum management rights for mobile phone services.

The commission said the merged organisation would continue to face competition from Telecom, as well as Orcon, Slingshot and other smaller businesses in providing fixed line voice and broadband services.

It concluded that the loss of rivalry would not lead to a substantial lessening of competition.

The commission said Vodafone and TelstraClear had no significant overlap in the mobile phone market and services to large corporate customers.

While Vodafone picks up radio spectrum, some will be transferred to TelstraClear's parent, Telstra, which will be available to other players

Telecom will continue to dominate the market, with IDC estimating the incumbent holds about half of the broadband market and two-thirds of the landline market compared with Vodafone's one-third share.

Telecom's share price rose 4 cents to $2.42 on Tuesday.