Vodafone (LON:VOD) has suffered another regulatory setback as the Australian competition regulator expressed worries over the proposed merger between the telco’s unit Down Under with TPG Telecom. The news comes after closer to home, the European Commission opened an in-depth investigation into the blue-chip company’s acquisition of Liberty Global assets in Germany and Central and Eastern Europe.
Vodafone’s share price has fallen deep into the red in London in today’s session, having given up 1.32 percent to 160.94p as of 13:50 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.21 percent lower at 6,865.85 points.
Vodafone-TPG merger concerns
The Australian Competition and Consumer Commission (ACCC) expressed preliminary concerns over the proposed merger between Vodafone Hutchison Australia, a joint venture between Vodafone and Hutchison, and TPG Telecom.
“Our preliminary view is that TPG is currently on track to become the fourth mobile network operator in Australia, and as such it’s likely to be an aggressive competitor,” ACCC Chair Rod Sims said in a statement, adding that the watchdog’s preliminary view was that “the merged TPG-Vodafone would not have the incentive to operate in the same way, and competition in the market would be reduced as a result”.
The Australian watchdog has invited submissions from interested parties by January 18, while its final decision is scheduled for March 28.
Analyst ratings update
UBS, which rates Vodafone as a ‘buy,’ set a price target of 230p on the shares today, while Credit Suisse reaffirmed the telco as an ‘outperform’ yesterday, without specifying a valuation on the stock. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 216.30p.