TPG and Vodafone to merge

TPG and Vodafone to merge

TPG Telecom and Vodafone Hutchison Australia (VHA) have agreed on a $15 billion merger.

The deal will create Australia’s third largest telco to compete with Telstra and Optus.

The news saw Hutchison Australia shares add 44 per cent during the day and TPG shares close 18.15 per cent higher.

Vodafone’s shareholders, Hong Kong-based CK Hutchison and UK-based Vodafone Group, will have 50.1 per cent of the merged company while TPG will have 49.9 per cent.

Combined, the two will own and operate a telecommunications network infrastructure that includes over 27,000 kilometres of metropolitan and inter-capital fibre networks, a leading mobile network with over 5000 sites, international transit capacity and a strategic portfolio of spectrum assets.

It will have revenues of over $6 billion and earnings of more than $1.8 billion.

The Australian Competition and Consumer Commission said it would review the proposed merger.

The “merger of equals” between Australia’s third and fourth largest telcos will also need approval from the Foreign Investment Review Board and shareholders.

The company will still be named TPG Telecom. A 10-year licence will allow it to continue to use the Vodafone brand on products.

Vodafone’s current CEO, Iñaki Berroeta, will be chief executive and managing director of the merged business, while TPG’s CEO and founder David Teoh will be chairman.

“The Australian telecommunications market is characterised by the presence of  Telstra and Optus,” Mr Berroeta said.

“Together, TPG and VHA will provide stronger competition in the market and greater choice for Australian consumers and enterprises across fixed broadband and mobile. The combination of our two highly complementary businesses and talented employees will create a more sustainable company, with enhanced capacity to invest in new technology and innovation.

We are confident that this merger will be highly beneficial to customers, shareholders and other stakeholders. The combination of the two companies will create an organisation with the necessary scale, breadth and financial strength for the future.”

“We will be a more formidable competitor against Telstra and Optus,” Mr Teo said.

“The characteristics that have made TPG what it is today — innovative, customer-focused, bold — will be magnified through this combination of such highly complementary businesses.

“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.”

 



An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.


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