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Has A Deal Already Been Struck As To Who Will Own TPG Vodafone?

COMMENT: 24 hours after TPG and Vodafone got the green light to merge the big question now is who will control the Company and what will the newly merged Company be called.

Speculation has it that TPG is lining up to take a controlling interest via a deal with CK Hutchison Holdings a Hong Kong based Company that currently own 50% of the Hutchison Telecommunications Australia entity that trades as Vodafone in Australia.

The other 50% is owned by Vodafone Group.

Hutchison Telecommunications Australia has not made money in Australia and are struggling to grow.

According to sources the scenario that could play out is that TPG take a 51% shareholding, Vodafone Group exit with the new entity licensing the Vodafone name.

British multinational telecommunications corporation and phone operator, Vodafone, store seen in Spain. (Photo by Budrul Chukrut / SOPA Images/Sipa USA)

The big winner could be David Siang Hai Teoh a reclusive Australian businessman, and the 25th-richest person in Australia who is estimated to be worth approximately US$2.9 billion.

He is the executive chairman of TPG, a company he founded with his Taiwanese wife Vicky in 1992 after emigrating from Malaysia in 1986.

TEoh is a deal maker and ChannelNews understands that a potential exit strategy for the Vodafone Group has already been discussed.

According to sources this deal could be announced within three months with discusions having already taken place.

During the past 24 hours there has been a lot of speculation about what this deal means and where it is heading.

Macquarie Telecom Group Ltd, CEO, David Tudehope said: “This decision will only worsen the lack of competition, which has meant our industry continues to underserve and overcharge customers. Now that the decision has been made to allow the merger to go ahead, the Government and ACCC will need to reconsider how to improve retail and wholesale competition in mobiles.”

“The telco industry gets twice the number of complaints to the Telecommunications Industry Ombudsman (TIO) as the banking industry’s Australian Financial Complaints Authority (AFCA), its new Ombudsman, even after the Royal Commission. As a result, the telco industry risks losing its social licence,” Tudehope concluded.
This sentiment was echoed by ACCC Chair Rod Sims. He said: “Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed.”

“The ACCC’s concern was that with this merger, mobile data prices will be higher than they would be otherwise. These concerns were reinforced by statements from the industry welcoming the merger and the consequent “rational” pricing,” Mr Sims added.

Goldman Sachs also doesn’t expect this to lead to much of a change in competition soon.

The broker said: “In the short to medium term, we see little reason to expect the merger to have material impact on the current rationality in the Australian mobile market, suggesting less disruption in the market than expected.”

“More choice and value for Australian consumers”

One person that doesn’t agree with these views is Vodafone Australia’s CEO, Iñaki Berroeta.

In response to the news, Mr Berroeta said: “For the first time, Australia will have a third, fully-integrated telecommunications company. This will give us the scale to compete head-to-head across the whole telecoms market which will drive more competition, investment and innovation, delivering more choice and value for Australian consumers and businesses.”

The merger is expected to be completed in mid-2020, subject to the remaining regulatory/shareholder approvals, and any appeal by the ACCC.

Australian Competition and Consumer Commission chairman Rod Sims was defiant following the ruling, saying history would prove he was right to block the merger, and that consumers had “lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services”.

TPG’s shares soared following the ruling, closing up 11.5 per cent at $8.15, the highest since October 2018.

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