Vodafone and TPG merge in “challenger” play against Telstra and Optus

Vodafone and TPG merge in “challenger” play against Telstra and Optus

Confirms merger plans to create $15 billion telco

Vodafone Hutchinson and TPG Telecom have confirmed plans to merge in Australia, with the combined entity set to create a $15 billion “challenger” in the market.

Following weeks of increased speculation, both parties have confirmed intentions to take on Telstra and Optus in a competitive local industry, driven by an “integrated fixed and mobile offering”.

The new-look business will see David Teoh - current CEO and chairman of TPG - take over as chairman of the merged group, while Iñaki Berroeta - current CEO of Vodafone - will become managing director and CEO.

Billed as a “merger of equals”, the provider brings together more than 27,000km of metropolitan and inter-capital fibre networks, alongside a mobile network with over 5,000 sites.

“The merger with Vodafone represents an exciting step-change in TPG’s evolution, and will benefit both our shareholders and Australian consumers alike,” Teoh said.

“Together TPG and Vodafone will have a comprehensive portfolio of fixed and mobile products, and will own the infrastructure required to deliver faster services and more competitive value propositions to Australian customers.

“With this merger, we will be a more formidable competitor against Telstra and Optus.”

If the proposed merger goes ahead the new business will be publicly listed on the Australian Securities Exchange under TPG Telecom Limited and subject to shareholder approval, is expected to be completed sometime in 2019.

Details of the deal will see TPG shareholders own 49.9 per cent of the new group while Vodafone will control 50.1 per cent.

“The Australian telecommunications market is characterised by the presence of Telstra and Optus,” Berroeta added. "Together, TPG and VHA will provide stronger competition in the market and greater choice for Australian consumers and enterprises across fixed broadband and mobile.

“The combination of our two highly complementary businesses and talented employees will create a more sustainable company, with enhanced capacity to invest in new technology and innovation.

“We are confident that this merger will be highly beneficial to customers, shareholders and other stakeholders.”

Furthermore, Berroeta said the merger will create an organisation with the “necessary scale, breadth and financial strength” for the future.

“The equal terms of the combination preserves the competitive strengths of the two businesses, meaning a sustainable long-term fixed/mobile competitor for Telstra and Optus,” Berroeta added. “The big winners of this will be Australia’s consumers, with the new company able to deliver even greater competition and value.

“From VHA’s perspective, we are joining TPG from a position of strength and momentum. VHA has a track record of reliability, stability and a fantastic customer experience, which has seen the business prosper.”

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