Vodafone merger plans cost TPG $6M over six months

Vodafone merger plans cost TPG $6M over six months

Comes as ACCC decides not to appeal Federal Court's merger decision

Credit: REUTERS/David Gray/File Photo

TPG’s merger plans with Vodafone Hutchison Australia (VHA) cost the publicly-listed telco $6 million in transaction costs during the six months to 31 January, according to the company’s latest financials. 

TPG told shareholders in its first-half financial report that its 1H20 reported earnings before interest, tax, interest, depreciation and amortisation (EBITDA) included $6 million one-off transaction fees relating to the planned merger with VHA, along with a non-recurring benefit of $3.3 million within the Corporate Division’s results. 

The telco reported a 3.2 per cent year-on-year drop in earnings before interest, tax, depreciation, amortisation and impairment for the half year, to $406.6 million. 

However, the company’s revenue was up by 0.9 per cent, year-on-year, to nearly $1.25 billion for the period.

TPG told shareholders that the combined National Broadband Network (NBN) headwinds of $55 million faced in the half-year were exactly half of the $110 million combined NBN headwinds that were previously anticipated in its FY20 full-year guidance.

“However, the headwinds for the first half were approximately $7 million less than we had forecast for the first half, predominantly due to NBN finally introducing some wholesale pricing relief for NBN services in October 2019,” TPG told shareholders.

Preparations for the commercial launch of TPG’s mobile services in Singapore, meanwhile, have progressed well, according to the company. Over 400,000 users have been on-boarded to the free trial service, with paid services expected to be launched in the coming weeks.

Looking ahead, TPG has upgraded its business as usual EBITDA guidance for the full-year FY20 from a range of $735-$750 million to now be in the range of $775-785 million.

The latest financials come as Australia’s competition watchdog decides against appealing the decision by the Federal Court to allow TPG and VHA to go ahead with their proposed merger.

Following the announcement by the Australian Competition and Consumer Commission (ACCC), which initially moved to block the merger, VHA CEO Iñaki Berroeta welcomed the ACCC’s decision not to appeal the court’s decision and said it cleared the way to take the next steps to finalise the merger.

“We are pleased that the ACCC has decided not to appeal the Court’s decision and that will allow us to quickly progress completion of the merger with TPG. We believe that the merger will allow us to be a stronger player that will bring more choice and value for Australian consumers and businesses,” he said.

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