BREAKING NEWS: TPG & Vodafone Confirm $15 Billion Merger
Following previous speculation, TPG Telecom and Vodafone Hutchinson Australia have confirmed their proposed merger – creating a $15 billion telco giant, and intensifying competition against Telstra and Optus.
The news has sent TPG shares soaring to a record high in early trade, up 10.2% to $8.69.
Currently ranked Australia’s third and fourth largest telco companies, the “proposed merger of equals” will give Vodafone Hutchinson Australia a [majority] 50.1% stake, with TPG holding 49.9%.
Despite Vodafone’s majority stake, the merged entity will re-list on the Australian Stock Exchange as TPG Telecom Limited.
In a published statement, TPG asserts the merger will establish a “more effective challenger to Telstra and Optus”, with the deal expected to finalise next year.
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.
The deal is subject to approval from the ACCC and the Foreign Investment Review Board (FIRB).
Privately-owned Vodafone Hutchinson Australia is currently a joint venture between British parent company Vodafone Group Plc and Hutchison Telecommunications [Australia] Limited.
Both Vodafone Hutchinson Australia and TPG Telecom are currently worth around $7.5 billion each, however, commentators assert the merger will leverage different strengths.
Latest numbers claim Vodafone Australia has a 19% share of the local mobile market, 6 million mobile subscribers. TPG trails with a 1% share and around 400,000 mobile subscribers.
In terms of broadband subscribers, TPG is said to hold 22% market share, with 1.9 million broadband subscribers – an area Vodafone does not compete in.
In the last financial year, TPG generated $2.5 billion in revenue, with Vodafone Australia snaring $3.6 billion.