Monday, 22 October, 2018

Statement on TPG and Vodafone Hutchison Australia's proposed merger

Image TPG-Vodafone Hutchinson presentation Image TPG-Vodafone Hutchinson presentation
Beatrice Douglas | 01 September, 2018, 15:29

It's spun as a "merger of equals", which is almost true: TPG will own 49.9 per cent of the new TPG Telecom Limited, while Vodafone Group and Hutchison (the global businesses who own Vodafone Hutchison Australia, local operator of the Vodafone brand) will hold 50.1 per cent.

"The Australian telecommunications market is characterised by the presence of Telstra and Optus", stated Iñaki Berroet, CEO of Vodafone Hutchinson Australia.

"The combined listed company will be a more capable challenger to Telstra and Optus, and will be much better placed to invest in next generation mobile and fixed line services", Nick Read, CEO-designate, Vodafone, said.

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

Shares in TPG were up 16 percent at A$9.14 in midday (0200 GMT) trade following the announcement.

TPG is also in the process of building a mobile phone network, but with the Vodafone network poised to join TPG's business, analysts are asking does the merged company need this new network? TPG also noted that their Singaporean mobile business would be split off to its existing shareholders "by way of an in-specie distribution".

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.


The merged company, to be listed as TPG Telecom Limited on the ASX, will have a combined market value of about $15 billion.

One of Australia's most acquisition-hungry telcos, TPG, is to merge with mobile carrier Vodafone Australia. Vodafone will provide a guarantee on AUD 2.4 billion of this debt, lower than the AUD 3.3 billion guarantee that Vodafone now provides for VHA's debt.

The Australian TPG was founded in the 1980s by David Teoh, originally as a distributor and sometimes manufacturer called Total Peripherals Group. 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.

'With this merger, we will be a more formidable competitor against Telstra and Optus.' said Mr Teoh.

The reclusive TPG chief executive David Teoh will be chairman of the merged group.

The Australian Competition and Consumer Commission said it will before long start an open survey of the proposed merger to recognize any opposition concerns.

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

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