TPG's iiNet buyout won't harm NBN: Turnbull

TPG's AU$1.4 billion acquisition of iiNet is 'what the market does', according to Australian Communications Minister Malcolm Turnbull.

Australian Communications Minister Malcolm Turnbull has indicated that he is not concerned about the impact that TPG's proposed takeover of iiNet may have on the state of the internet service provider (ISP) market and the National Broadband Network (NBN).

TPG announced on Friday that, subject to regulatory approval, it would acquire iiNet in an agreement worth AU$1.4 billion.

Under the deal, iiNet's brand would remain separate, but the combined entity would have more than 1.7 million broadband customers.

This would make the TPG-iiNet combination possess a larger broadband customer base than Optus, but still nowhere near the 3 million fixed-line data customers Telstra has.

Turnbull said on Friday that he was not concerned about the potential takeover, despite the reduction in competition that the acquisition may bring to the market.

"Well, it's a free market, people are entitled to buy and sell companies. They will obviously have to deal with the ACCC [Australian Competition and Consumer Commission] on that. I see the ACCC has said they are considering it, TPG has said they have already had confirmation that there aren't competition issues, but that's what happens in a free market," he said.

He said that the deal would not impact the NBN, or the revenues that NBN Co needs to pay off the network construction.

"I think TPG and iiNet, if they do consummate their merger, that will just be a bigger player in the market. So you will then have in the fixed-line area, you will have Telstra as a big player, Optus, and iiNet-TPG or TPG-iiNet," he said.

"The profitability of the NBN Co depends on two things: One, getting it built in the most cost-effective way, and secondly, it depends on people using it. So the more customers we have on the NBN, the more people that are buying broadband packages, will mean that we will have more wholesale customers like TPG, iiNet, Telstra, Optus, and of course many others."

The ACCC will commence a public consultation on the proposed takeover, and Greens communications spokesperson Scott Ludlam called on the competition watchdog to reject the takeover.

"I will be reminding the ACCC of its obligation to directly prohibit acquisitions which would be likely to have the effect of 'substantially lessening competition in any market'," Ludlam said on Friday.

"Competition in Australia's broadband sector has been painstakingly built up over a period of more than two decades. The ACCC must not sit by and let the sector descend into a feeding frenzy that leaves consumers with no real choice between services."

Shadow Communications Minister Jason Clare has been approached for comment.

The deal was welcomed by mobile network operator Vodafone Australia, which does not offer a fixed-line broadband service.

"Australians pay some of the highest fixed-line prices in the world, and there is virtually no fixed-line competition in regional Australia. This is a significant drag on the economy," Vodafone's general manager of industry strategy and public policy Matthew Lobb said.

"In a fixed market dominated by one player and structural barriers which protect it from competition, a combined TPG and iiNet would deliver national scale, creating new competitive dynamics for more innovation, better service, and better consumer outcomes."