Published: Sat, September 01, 2018
Hi-Tech | By Preston Stone

TPG Telecom to merge with Vodafone Australia

TPG Telecom to merge with Vodafone Australia

TPG Telecom and Vodafone Hutchinson Australia (VHA) have confirmed they will combine in a "proposed merger of equals".

Earlier, Australia blocked China based telecom equipment maker Huawei from supplying 5G telecom equipment citing security issues.

At 0200 AEST on Thursday, Hutchison shares had jumped 48 percent taking them to 0.18 Australian dollars (0.13 US dollars) per share, while TPG bounced 15.04 percent to 9.06 Australian dollars (6.60 USA dollars) per share. This combination of leading mobile operator VHA and TPG's fixed line services will strengthen scale and financial muscle to the merged group, thus putting forward tough competition against Telstra and Optus.

TPG had in May announced that it would be launching six-month mobile plans at zero cost for its first customers from Q3 or Q4 this year, with the provider also offering customers access to unlimited data.

The two telcos have announced today that they have made a decision to enter into a "merger of equals transaction to establish Australia's leading challenger full-service telecommunications provider".

The companies also stated that "there are no changes now planned to any of the existing brands of either TPG or VHA".

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The so-called "merger of equals" will allow the two companies to better invest and drive innovation and product improvement to give customers more choice, they said. Vodafone will provide a guarantee on approximately A$2.4bn of this debt, lower than the approximately A$3.3 billion guarantee that Vodafone now provides for VHA's debt.

David Teoh, now CEO and chairman of TPG, will be the chairman and Inaki Berroeta, current CEO of VHA, will be the managing director and CEO of TPG Telecom, Vodafone said in a statement.

The agreement, aimed at taking the fight to larger mobile and broadband rivals Telstra and Optus in the Australian market, would see the privately-owned VHA hold a 50.1% majority stake.

"You just have to look at the amount of capital that Vodafone has placed in this infrastructure over the years and that's something that usually links investors to the asset for a long time", Inaki Berroeta, Vodafone Hutchison Australia's chief executive officer, told reporters on a conference call. David Teoh, who is as of now the CEO and executive of TPG, will turn into the new gathering's director.

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

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