Telstra, Adam Internet terminate acquisition deal

Telstra's Australian arm and South Australia-based Adam Internet have decided to terminate their acquisition deal, the financial details of which had not been disclosed.

Telstra had announced its acquisition agreement with thethe ISP in October last year, but was obstructed by concerns from the Australian Competition and Consumer Commission (ACCC).

Other ISPs, including iiNet, Vodafone, Optus and Macquarie Telecom, also objected to the deal saying that Telstra was the wholesale owner of the fixed copper network in Australia, and would therefore be in a position to offer Adam Internet better prices than it did to its competitors.

The approval of the ACCC, was required for the acquisition of Adam Internet, the commission however, believed it would lessen competition in the market.

In a press release issued today, Telstra's chief customer officer Gordon Ballantyne said the telco had attempted to address the concerns that the ACCC raised. The telco later requested for postponement of the decision date by ACCC which was set for February.

The decision to drop the acquisition came about as Telstra failed to secure the ACCC's approval of the agreement by its contractual end date of 30 June, 2013.

According to Greg Hicks, executive chairman of Adam Internet, Adam Internet was disappointed the important condition precedent could not be achieved in a commercially acceptable time frame, and therefore it would no longer be proceeding.

The acquisition, was announced in October last year, with the contractual end date of 30 June.

According to Ballantyne, the telco had attempted to address issues the ACCC had raised about the acquisition.

The ACCC had in December last year sought public comment on the proposed acquisition.

A statement of issues released by the regulator in December said: ''The ACCC's preliminary view is that the removal of Adam as an independent competitive constraint on Telstra may enable Telstra to increase prices and/or reduce the quality or offering of its retail fixed broadband services in South Australia.

''Telstra is the largest provider of retail fixed broadband services in South Australia in terms of subscriber numbers, while Adam is the third largest. The proposed acquisition would result in Telstra increasing its market share in South Australia from approximately 40-45 per cent to 55-60 per cent."