Australia's competition regulator has confirmed that it will oppose the merger between TPG Telecom Ltd and Vodafone Hutchison Australia.
Vodafone Hutchison Australia is a joint venture between FTSE 100-listed Vodafone Group PLC and Hutchison Telecommunications (Australia) Ltd.
The Australian Competition & Consumer Commission had said in mid-December it had concerns about the merger, believing it could lead to higher prices.
The regulator said at the time a merger between the two, reducing the number of large players to three from four, would "likely lead to higher prices and less innovative plans for mobile customers".
On Wednesday, the ACCC said Australia already has "very" concentrated mobile services and fixed broadband markets, with three firms taking up over 85% of market share in both.
"Broadband services are of critical importance to Australian consumers and businesses, across both fixed and mobile channels," said ACCC Chair Rod Sims.
"Given the longer-term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly."
"Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability," said Sims.
However, a merger between the two would lessen competition, the ACCC said.
"TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services," said Sims.
"After a thorough examination, we have concluded that, if this proposed merger does not proceed, there is a real chance TPG will roll out a mobile network."
Vodafone Group shares were 0.3% lower in London early trade Wednesday at 139.58 pence each.