Published: Sat, September 01, 2018
Tech | By Amelia Peters

Vodafone, TPG propose 'merger of equals'

Vodafone, TPG propose 'merger of equals'

Vodafone Hutchison Australia Pty, Vodafone's unprofitable mobile-phone venture with CK Hutchison Holdings Ltd., said Thursday it would merge with local broadband provider TPG Telecom Ltd.to better challenge market leader Telstra Corp. TPG has shaken up Australia's fixed-line internet market.

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

TPG jumped 18% to A$9.31 in Sydney, valuing it at A$8.6 billion.

Vodafone, a customer of TPG's dark fibre to connect some of its base stations, has 5,000 sites, and around 6 million mobile subscribers on its LTE network. 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.

The two telcos have announced today that they have chose to enter into a "merger of equals transaction to establish Australia's leading challenger full-service telecommunications provider". There's now no word on what happens to existing TPG and Vodafone customers, but it's safe to assume that most legacy plans will be replaced with similar offerings from TPG Telecom Limited.

"If the merger is approved, it will create even more opportunities for us as a combined entity to drive value for Australian consumers".

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TPG chairman and CEO, David Teoh said shareholders and Australian consumers will benefit the most from the merger.

TPG will hold the remaining 49.9pc stake in the group, which will be listed on the Australian Securities Exchange.

An announcement from the two telcos said that VHA expected to have net debt $1.94 billion (plus an $80 million spectrum instalment at the end of January) following a restructure its existing debt facilities by its owners, Vodafone and Hutchison.

Both companies confirmed they will bid for 5G spectrum when it is auctioned by the Federal Government later this year.

The merger will create a much stronger integrated competitor for Telstra and Optus but will also mean the long-standing status quo of three mobile competitors, which had been threatened by TPG's mobile network build, will be preserved and the threat of disruptive infrastructure overcapacity dispelled.

Mr Teoh will be chairman of the merged group, with Inaki Berroeta, current chief executive of Vodafone Australia, taking on the role of managing director and chief executive.

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