Telstra has decided to drop its planned takeover of the South Australian based ISP Adam Internet, after the incumbent carrier failed to resolve competition issues raised by the regulator before the deal’s cut-off date.
Telstra announced its plan to buy Adam Internet in October last year, but the proposed acquisition was met with concerns from the Australian Competition and Consumer Commission (ACCC), which said the deal would reduce competition in the broadband market.
“The ACCC’s preliminary view is that the proposed acquisition is likely to result in a substantial lessening of competition in the supply of retail fixed voice and broadband services,” ACCC chairman Rod Sims said in a statement released last December seeking public comment about the proposed deal.
“This is because Telstra would have the ability and incentive to use its market power in wholesale markets to favor the Adam Internet business over its other wholesale customers, which is likely to foreclose competition in the relevant downstream retail markets.”
The acquisition also drew strong opposition from rivals, such as Vodafone, iiNet and Macquarie Telecom, which had urged the ACCC to halt Telstra’s plan.
In a release sent out Wednesday, Telstra's chief customer officer Gordon Ballantyne said the telco had attempted to address the concerns that the ACCC raised about the acquisition. Telstra had also requested the ACCC postpone its decision date, which was set to be made in February.
The decision to call off the deal comes as Telstra was not able to secure approval from the ACCC by the contractual end date of June 30.
“We are very disappointed by this outcome,” Ballantyne said “We believe this transaction would have provided real benefit to Australian consumers and would have added new competition into the broadband market.”
Adam Internet executive chairman Greg Hicks said: “Adam Internet is disappointed this important condition precedent could not be achieved in a commercially acceptable time frame, and therefore we will no longer be proceeding.”