Vodafone Australia merges with TPG to take on Telstra and Optus

01 September, 2018, 15:31 | Author: Julian Harrison
  • RMSotheby’s  Simon Clay

Vodafone Hutchison Australia and TPG Telecom announced plans Thursday to merge into a Aus$15 billion (US$11 billion) unit to take on key rivals Telstra and Optus as competition heats up in the telecommunications sector.

Bootnote: Readers outside Australia should take note that TPG Telecommunications is not related to the U.S. private equity company of the same name.

"Together we will become a more effective industry challenger that strives to create competitively priced consumer products with the high levels of customer service that differentiates us in the market", Mr Teoh said.

TPG shareholders will get 49.9 per cent of the new group and Vodafone Hutchison shareholders will get the remaining 50.1 per cent.

TPG and Vodafone Hutchison Australia have announced that they will proceed with their merger to form a telecommunications giant that they say will have an enterprise value of approximately AU$15 billion.

The $9.99 plan, which iTWire covered in an article "TPG to offer "free unlimited mobile data plan", which was free for the first six months and then $9.99 per month thereafter, is now not certain to proceed. TPG sits behind Telstra as the biggest broadband provider in the country, but has been looking to shore up its mobile services in Australia in recent months.




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". Vodafone will provide a guarantee on approximately A$2.4bn of this debt, lower than the approximately A$3.3 billion guarantee that Vodafone now provides for VHA's debt.

VHA CEO Iñaki Berroeta will be the managing director and chief executive of the merged group, while TPG CEO and chairperson David Teoh will be the chairperson.

TPG is Australia's second largest internet service provider (ISP) with more than 1.9 million subscribers, while Vodafone is the third largest mobile operator with 6 million subscribers.

The two telcos will combine as "TPG Telecom Limited", granted they receive approval from the Australian Competition and Consumer Commission (ACCC).

In parallel to the merger agreement, TPG and VHA have signed a separate joint venture agreement in order to participate together in the upcoming spectrum auction and manage their spectrum licences.

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