ACCC’s EastLink decision could crimp Transurban toll road growth

afr.com:

Incoming Transurban chief executive Michelle Jablko faces a more difficult task expanding the tollroad group after the competition watchdog blocked it from buying Melbourne’s EastLink motorway.

The decision, which was not expected by Transurban or its investors, is the first time that the company has been prevented from acquiring a local road.

Unfettered growth in Australia has enabled Transurban to expand its network of roads in Sydney, Melbourne and Brisbane, increasing its market capitalisation sixfold in the past decade to $39 billion.

Transurban wants to add Melbourne’s East Link to its national toll road network. John Woudstra

Growth has been spearheaded by chief executive Scott Charlton, who will step down at the end of November to join Sydney Airport, leaving Ms Jablko, who is currently chief financial officer, at the helm.

But the ruling by the Australian Competition and Consumer Commission, which argued a potential sale of EastLink to Transurban would “substantially lessen” competition for concessions in Victoria, could make it harder for the company to successfully bid for other roads nationally.

“It could change the outlook for Transurban in Australia as this has to be considered a precedent and a potential limitation on further growth domestically,” said Sarah Shaw, chief investment officer at 4D Infrastructure, which owns shares in the company.

While 4D Infrastructure still believes Transurban is attractive without EastLink, Ms Shaw said Ms Jablko had some “strategic decisions” to make, including whether the company would “morph into a cash cow” and potentially be acquired or expand further in the United States.

Transurban already operates 22 toll roads in Australia: 11 in Sydney (including the three roads