ACCC OKs Vocus acquisition of NextGen Networks for $807 million, including 17,000 km of internet cables

The Australian Competition and Consumer Commission (ACCC) approved on Thursday the $807-million acquisition of NextGen Networks by Vocus. In purchasing 17,000 kilometres of internet cables, the Australian Singapore Cable and North West Cable System, Vocus could lower cost of transferring data traffic overseas than buying capacity from another operator.

The regulator said it did not oppose the buy-in because there is hardly an overlap in the services provided by Vocus and NextGen, reports The Australian. ACCC Chairman Rod Sims said the purchase was closely scrutinised by the commission as it assessed the impact on smaller broadband providers.

With the approval, Australia’s telecommunication sector now has only four main players – Vocus, TPG Telecom, Optus and Telstra. Sims points out market participants showed very little concern over the purchase.

In instances when there was overlap, the ACCC took into consideration the combined competitive constraint from the three other major wholesale suppliers of telecom services in the country which would likely be enough to limit damage to competition, Sims explains. But the chairman says the regulator would continue to monitor competition in the telecommunications industry, especially since there were recent consolidation and more vertical integration, reports Sydney Morning Herald.

However, since the big four now supply more than 90 percent of broadband services in Australia, Sims says, “Any future potential mergers or acquisitions that increase concentration can expect to receive closer examination from the ACCC.” Vocus Chief Executive Geoff Horth says the company hopes to complete the deal by October.

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