Vodafone, TPG to merge into $15b giant
Vodafone Australia and TPG Telecom have announced plans to merge into a single $15 billion telecommunications giant, in an effort to take on telco heavyweights Telstra and Optus.
The two companies on Thursday confirmed to the ASX they plan an all-scrip, merger-of-equals, after revealing the discussions last week.
Under the deal, TPG shareholders will own 49.9 per cent of the group, while Vodafone Australia shareholders will own the remaining 50.1 per cent.
The merged company - to be listed as TPG Telecom Limited on the ASX - will have a combined market value of about $15 billion.
Vodafone Australia - a joint venture between Hong Kong's Hutchison Whampoa and British parent Vodafone Group - is the third-largest mobile player in Australia, with six million subscribers.
TPG - which also owns iiNet and Internode - is the country's second-largest internet service provider with more than 1.9 million subscribers and is helmed by billionaire David Teoh.
Mr Teoh will be chairman of the merged group, with Inaki Berroeta, current CEO of Vodafone Australia, taking on the role of managing director and CEO.
"This merger will create size, scale and financial strength for us to compete with incumbents and that will bring tremendous benefit to the Australia consumer," Mr Teoh told analysts on Thursday.
"These two businesses are very different but extremely complementary," Mr Berroeta said.
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 merged company will take on a "multi-brand strategy", utilising the Vodafone brand as well as the three TPG businesses, he added.
The merger is expected to achieve "significant" synergies, particularly with regard to telecommunications network infrastructure.
Major shareholders of Vodafone Australia and TPG - including Mr Teoh - have entered a 24-month voluntary escrow arrangement as a show of their commitment to the merger.
TPG will also separate its Singapore mobile business to existing shareholders by way of a non-cash distribution, in a deal which will not affect TPG's merger ownership.
The merger is expected to be completed next year subject to approval from regulators, including the Foreign Investment Review Board and the Australian Competition and Consumer Commission (ACCC).
The competition watchdog told AAP it will soon commence a 12-week public review into the merger.
"The review will look at competitive impacts in mobile services, where TPG now has a growing presence, and also fixed line, where Vodafone is a discounter," a spokesperson for the ACCC said.
"We will also explore likely impacts in related markets, such as spectrum acquisition markets, wholesale services, and mobile roaming."
Separate to the merger agreement, TPG and Vodafone Australia also signed a joint venture agreement to acquire a 5G spectrum at an auction by the federal government later this year.
At 1210 AEST, shares in TPG were up $1.30, or 16.6 per cent to $9.2, while shares in Hutchison Telecom Australia - as Vodafone Australia is known, surged 60 per cent to 20 cents each.
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