Vodafone in $11bn Australian merger

Sep 02, 2018, 03:44
Vodafone in $11bn Australian merger

"There are no changes now planned to any of the existing brands of either TPG or VHA".

The news has sent TPG shares soaring to a record high in early trade, up 10.2% to $8.69.

The Australian Competition and Consumer Commission (ACCC) has announced that it will soon start a public review of the proposed merger between TPG and Vodafone Hutchison Australia.

Deutsche Bank and BofA Merrill Lynch advised Vodafone Hutchison Australia.

Vodafone Australia will have the majority stake in the new company, commanding 50.1 percent ownership of the ASX-listed group compared with TPG's 49.9 percent.

"TPG faced the reality that building out a new mobile network after they acquired the spectrum for it is a very costly exercise and it was - for obvious reasons - very hard for them to negotiate access with the other operators".

Vodafone boss, Inaki Berroeta, has been appointed CEO and MD of the combined entity, with TPG boss, David Teoh, taking the helm Non-Executive Chairman.

Vodafone Australia, a 50/50 joint venture between Hutchison Telecommunications (Australia) HTA.AX and Vodafone, is the third-biggest mobile player by subscriber numbers after Telstra and Optus.

"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.

In the absence of better proposal TPG Directors unanimously recommend in favor of the scheme.

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

TPG also announced plans to "separate" its nascent Singapore mobile services business as part of the deal, with the deal to be completed via an "in specie distribution" presumably of cash or scrip in the Singapore business.

"The equal terms of the combination preserves the competitive strengths of the two businesses, meaning a sustainable long-term fixed/mobile competitor to Telstra and Optus".

"Customers can continue to use our services, upgrade or change plans, or join us as a new customer with confidence". The Government is auctioning 125 MHz of 3.6 GHz band spectrum, with the auction expected to commence in late November 2018.

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