Friday, 19 October, 2018

Vodafone Hutchison Australia, TPG Telecom Agree Merger

It can be yours. Well a bit of It can be yours. Well a bit of
Pete Mitchell | 01 September, 2018, 15:34

The companies announced the merger to the ASX this morning, which if allowed to proceed would create a telco that services 22% of the fixed line market and 20% of mobile phones in Australia.

Vodafone Australia, owned by Hong Kong-based CK Hutchison and Vodafone Group, will have a majority 50.1pc stake in the merged group, which will be called TPG Telecom.

While VHA is now Australia's third-largest mobile operator, TPG is one of the country's largest internet service providers. Vodafone now sits in third place in the market share race, accounting for just over 18%, just short of 6 million subscriptions according to the firm.

The merger will also bulk up Vodafone's 156 MHz of mobile spectrum with TPG's little-used 40 MHz slice, bringing it close to Telstra's 217 MHz (Optus is far out in front of the mobile market in spectrum holdings with 334 MHz).

Australian telecommunications entrepreneur Bevan Slattery has previously predicted that TPG will become the second-largest carrier in Australia within five years, while analyst firm Telsyte has said TPG could sign up two in five Australians to its mobile network. David Teoh, now the CEO and chairman of TPG, will become the chairman.

One of Australia's most acquisition-hungry telcos, TPG, is to merge with mobile carrier Vodafone Australia. Shares in Hutchison Telecommunications Australia (a shareholder in Vodafone Australia), leapt to 18 cents, up 445 on the day and 240% in the month so far.

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Shares were trading 2% lower after the announcement.

Mr Berroeta said the market ultimately needed "strong players" to take on Telstra and Optus, adding that competition wasn't necessarily about "many small players". The board of the merged entity will include David Teoh as chairman (currently CEO and Chairman of TPG), Inaki Berroeta as managing director and CEO (current CEO of VHA), existing TPG directors Robert Millner and Shane Teoh, two nominees of Vodafone, two nominees of HTAL, and two new independent directors.

"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".

The competition watchdog said it would soon commence a 12-week public review into the merger.

The scope of the joint venture is to acquire, hold and licence 3.6 GHz spectrum.

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