Saturday, 20 October, 2018

Vodafone in $11bn Australian merger

Image TPG-Vodafone Hutchinson presentation Image TPG-Vodafone Hutchinson presentation
Nina Mathis | 01 September, 2018, 15:31

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

Ben McIntosh, Vodafone's chief commercial officer, said in a statement sent to CNET that the merger "will create even more opportunities for us as a combined entity to drive value for Australian customers".

The "merger of equals" sees TPG shareholders take 49.9% stake while Vodafone Hutchison shareholders will hold 50.1%.

The new ASX-listed group will be named "TPG Telecom Limited" and have approximately 20 per cent of the Australian mobile market share and 22 per cent of the fixed line broadband market share.

TPG shares closed at $9.31, up more than 18% on the day and over 60% in the past month, though yesterday's close is well short of the $12.84 hit in July 2016 before a profit downgrade hit confidence in the stock because of the imminent impact of the NBN's rollout.

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. Additionally, the combined entity will benefit from revenue synergies through cross-selling of products across both VHA and TPG's corporate and consumer customer bases.




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.

TPG and Vodafone said they will form a joint venture that will put in a bid for a slice of Australia's 5G wireless spectrum during an upcoming government auction.

One of Australia's most acquisition-hungry telcos, TPG, is to merge with mobile carrier Vodafone Australia. The merger is expected to be completed next year, with TPG founder David Teoh stepping in as chair of the merged group, while Vodafone's current CEO, Iñaki Berroeta will be managing director and CEO. The company will be listed on the Australian Securities Exchange and called TPG Telecom.

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.

"The equal terms of the combination preserves the competitive strengths of the two businesses, meaning a sustainable long-term fixed/mobile competitor to Telstra and Optus".

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