Vodafone seals £8.4bn deal to merge Australian business

Delia Walker
September 1, 2018

Vodafone Hutchison Australia (VHA) and TPG Telecom have agreed the terms of a merger to establish a new integrated operator in Australia worth an estimated AUD 15 billion.

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"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 to benefit Australian consumers and businesses".

Vodafone and Hutchison will own will hold 50.1 per cent of TPG "Telecom Limited" and TPG will own 49.9 per cent.

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.

As part of the agreement, TPG's Singapore operations will be separated and will enter into a commercial and transitional services arrangement with the merged company in relation to certain services upon completion.

The board will comprise the CEO and chairperson, existing TPG directors Robert Millner and Shane Teoh, two Vodafone nominees, two Hutchison Australian nominees, and two new independent directors.

Prior to the merger announcement, TPG had been set to launch its AU$1.9 billion Australian mobile network in the second half of 2018 across Sydney, Melbourne, and Canberra, with the telco in March announcing the installation of sites in Sydney and Melbourne. Shares in Telstra were also up just over 2.8% yesterday to $3.23, taking their gain for the month so far to more than 14%.

Iñaki Berroeta, the chief executive of Vodafone Australia told the media: "The combination of the two companies will create an organisation with the necessary scale, breadth and financial strength for the future".

The Australian Competition and Consumer Commission said it will soon begin a public review of the proposed merger to identify any competition concerns.

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".

TPG chairman and chief executive David Teoh (and major shareholder in TPG), said in a statement the tie-up represented an "exciting step-change" in the company's evolution.

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