Vodafone Australia and TPG announce $15bn merger

01 September, 2018, 15:33 | Author: Elena Summers
  • It can be yours. Well a bit of

Australian ISP group TPG Telecom and mobile operator Vodafone Australia have announced plans to merge to create a full-service telecoms operator. The company expects to hold 20 percent of the Australian mobile market share, and 22 percent of the fixed-line broadband market upon merging.

The company will be owned 50.1 percent by Vodafone Australia shareholders and 49.9 percent by TPG shareholders, with the two companies to form a joint venture ahead of the upcoming 3.6GHz spectrum auction to join forces in bidding for 5G spectrum holdings - a JV that they said would continue whether the merger proceeds or not.

VHA is jointly owned by its British parent company Vodafone Group Plc and Hutchison Telecommunications (Australia) Limited.

The deal is expected to be completed next year, after approval from regulators and the competition watchdog. Stocks in TPG Telecom jumped 18%.

Combined with Vodafone's improving mobile offer - it has 19% of the market - TPG's broadband could help attract customers disaffected with Telstra and Optus.

Vodafone is betting on an $8 billion merger to better compete with Australia's telecom giants as the country prepares to shift to faster mobile networks.

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David Teoh, now CEO and chairman of TPG, will be the chairman and Inaki Berroeta, current CEO of VHA, will be the managing director and CEO of TPG Telecom, Vodafone said in a statement. "With this merger, we will be a more formidable competitor against Telstra and Optus".

Nick Read, CEO-designate of Vodafone, said: "This transaction accelerates Vodafone's converged communications strategy in Australia and is consistent with our proactive approach to enhance the value of our portfolio of businesses".

Now trading at 169.08p, down 2.23 per cent as of BST 11.12, Vodafone PLC (LON:VOD), like many other companies on the Index, is struggling to gain momentum as GBP strength soars.

Berroeta is expected to stay on as boss of the merged group, while TPG's chief and chairman, David Teoh, is set to become chairman.

"You just have to look at the amount of capital that Vodafone has placed in this infrastructure over the years and that's something that usually links investors to the asset for a long time", Inaki Berroeta, Vodafone Hutchison Australia's chief executive officer, told reporters on a conference call.

The Australian Competition and Consumer Commission said it will soon begin a public review of the proposed merger to identify any competition concerns.

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