The Hutchison Telecom Ltd (ASX: HTA) share price is down 18% today, is it now worth buying?
Hutchison Telecommunications has a 50% interest in Vodafone Hutchison Australia Pty Limited (VHA), it was created in 2009 in a merger between ‘3’ and Vodafone Australia. Hutchison Whampoa Limited (CKHH) is the majority shareholder of Hutchison.
What’s happening to Hutchison?
Vodafone Australia planned to merge with TPG Telecom Ltd (ASX: TPM) in a $15 billion deal. The idea was to generate significant synergy benefits and avoid having to create two 5G mobile networks. The deal made sense.
However, the Australian Competition and Consumer Commission (ACCC) is acting like a disapproving parent who doesn’t want the two telcos to be joined in a union.
ACCC Chair Rod Sims said: “Our preliminary view is the merged TPG-Vodafone would not have the same incentive to operate in the same way, and competition in the market would be reduced as a result.”
So with the deal dead, is Hutchison a buy?
TPG noted that the ACCC’s statement was only a preliminary finding and it aims to address the issues raised. So, the deal may not actually be dead.
However, the Hutchison share price is 100% higher than the pre-deal announcement price, so it still has a high chance of the deal going ahead already priced in. Until the deal is approved or rejected it might be better to consider shares that have a clearer path to long-term growth like the ones in the below free report.
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