Industry

Vodafone, TPG announce merger of equals

Vodafone, TPG announce merger of equals

"This merger creates the size, scale and financial strength for us to compete with the incumbents", TPG Chief Executive Officer David Teoh told investors on a conference call.

The merger would bring together the more than 27,000km of fibre networks and 500 mobile sites owned by the pair across Australia, making it one of Australia's largest full-service telcos.

TPG chairman and chief executive David Teoh will be chairman of the merged group, while Vodafone boss Iñaki Berroeta will be chief executive and managing director.

Apart from the debt the Vodafone and Hutchison groups appear to be taking onto their own balance sheets to create the near-equality of interests between the Vodafone and TPG shareholders, TPG will spin out its relatively recently created Singapore mobile business to its shareholders. The combination of these assets will maximise the opportunities presented by convergence and best position the combined company to invest in 5G technologies.

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.

They said they have no plans to change their existing brand names in the country for the time being.

The merger between TPG and Vodafone would, thus, make life easier for both Telstra and Optus.

Along with shareholder approval, the merger will hinge on approval from the Foreign Investment Review Board as well as the Australian Competition and Consumer Commission.

TPG's Singapore operations will be spun off into a separate company, with the telco set to launch Singapore's fourth mobile network by the end of 2018.

TPG also claims 22,000 km of metro and long-haul fibre serving its own and the NBN's points of presence, "thousands" of on-network buildings, and its own worldwide links (a cable to Guam, plus capacity on the Australia-New Zealand-USA Southern Cross cable).

TPG will gain the bottom 20 percent of the market by offering a low-priced mobile product with no download limits, Bevan Slattery has predicted, adding that the network build should not cost as much as forecast.

"Together, TPG and Vodafone will provide stronger competition in the market and greater choice for Australian consumers and enterprises across fixed broadband and mobile", Berroeta said.

TPG's first mobile customers will be offered six months of free unlimited data, after which it will cost AU$9.99 per month, with the network to be available across Sydney, Melbourne, Canberra, Brisbane, and Adelaide as of Q3-Q4.


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