SYDNEY (Reuters) - An Australian court approved a A$15 billion ($10.1 billion) merger between a unit of Britain's Vodafone Group VOD.L and internet provider TPG Telecom TPM.AX on Thursday, overruling a regulator and enabling a huge rival to the country's top telcos.

A woman holds her phone as she walks past an advertisement for Australia's TPG Telecom Ltd in central Sydney, Australia, April 12, 2017. REUTERS/Steven Saphore

A Federal Court judge said a tie-up between Vodafone's joint venture with local telco Hutchison Telecommunications (Australia) Ltd HTA.AX and TPG would not harm competition, rejecting the Australian Competition and Consumer Commission's (ACCC) reason for blocking the deal last year.

The ruling revives a plan to challenge the dominance of Telstra Corp Ltd TLS.AX and Singapore Telecommunications's STEL.SI Optus in the Australian market by giving TPG, an internet company, and Vodafone, a mobile phone company, access to each other's sizeable nationwide networks.

The regulator has a month to lodge an appeal.

TPG had been looking for a way into the highly-anticipated 5G mobile market - where Vodafone is gearing up to compete - after halting construction of its own network due to an Australian ban on parts supplied by China’s Huawei Industries.

“This merger...gives a lot more certainty that there will be a strong 5G player in the market. We have confirmation we’ll have three 5G players,” Vodafone Hutchison Australia CEO Iñaki Berroeta said on a call with analysts.

TPG founder and Executive Chairman David Teoh said in a statement the company was “very pleased with the Federal Court decision” although it still needed shareholder and other regulatory approvals.

Shares of Hutchison surged as much as a quarter, while TPG shares gained 11%. Shares of Telstra, which dominates the Australian mobile and internet markets, had risen earlier on Thursday after it released its half-year earnings but fell up to 2.4% after the court ruling. SingTel’s Singapore-listed shares were down 1.2%.

The ruling was “consistent with our expectations and we’d already factored in a successful merger”, Credit Suisse analysts said in a note.

REGULATOR REBUFF

The ruling is a blow to the ACCC which has had decisions to block some of the country’s biggest M&A deals of recent years overturned by courts, including the TPG-Vodafone deal.

“Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,” ACCC Chairman Rod Sims said in a statement.

Sims added the regulator was considering the judgment.

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The ACCC had argued TPG may yet build a 5G network - without Huawei parts - if it had no other option. TPG had ruled out revisiting the network on grounds that other parts suppliers were too expensive.

Speaking on a call with analysts to discuss earnings, which was held at the same time as the court ruling, Telstra CEO Andy Penn declined to comment on the effects of competition with TPG in the 5G market.

“Frankly, it’s an already incredibly, an intensely competitive market,” Penn said.

Murray King, chief financial officer of SingTel-owned Optus, said on an earnings call the company would “see how the merged entity looks to drive their operations and how they go to market”.

“We think we are well-placed but we don’t take competition lightly,” he said.