After rumours started floating about a merger between TPG Telecom Limited and Vodafone Hutchison Australia last week, the companies have today officially confirmed the $15 billion ‘merger of equals’ which will establish what they say is ‘Australia’s leading challenger full-service telecommunications provider’.
The ‘merger of equals’ pertains to the split of shares and ownership with TPG shareholders owning 49.9% of the new merged group which will be called ‘TPG Telecom Limited’ while VHA shareholders will own the remaining 50.1%. The merger is expected to be completed next year, with TPG founder David Teoh stepping in as chair of the merged group, while Vodafone’s current CEO, Iñaki Berroeta will be managing director and CEO.
The Merger was unanimously recommended by the Board of TPG, with TPG Chairman, David Teoh saying
The Merger with VHA represents an exciting step-change in TPG’s evolution, and will benefit both our shareholders and Australian consumers alike. Together TPG and VHA 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.
The newly merged group will allow them to ‘compete more effectively with Telstra and Optus’, including in 5G. The merged group will have around 196MHz of 5G spectrum in the Melbourne and Sydney areas, with the merged group announcing they will jointly bid in the upcoming 5G spectrum auction which will see the Australian Government auctioning off 125MHz of 3.6GHz band spectrum in November.
The merger will join both their fixed broadband and mobile services, with TPG Australia’s second largest fixed line residential subscriber base of over 1.9 million subscribers, and Vodafone is currently the third largest mobile telco with their recent financial announcement listing almost 6 million subscribers.
Vodafone CEO Iñaki Berroeta said
The Australian telecommunications market is characterised by the presence of Telstra and Optus. Together, TPG and VHA will provide stronger competition in the market and greater choice for Australian consumers and enterprises across fixed broadband and mobile.
In terms of what customers can expect, VHA Chief Commercial Officer Ben McIntosh said it’s business as usual for customers. Mr McIntosh said
We’re very excited about the future, but for the moment, nothing changes for our customers. They can continue to enjoy all the things they love about us including $5 Roaming, no lock-in handset contracts, 35-day prepaid expiry, and NBN Instant Connect and 4G Backup. Customers can continue to use our services, upgrade or change plans, or join us as a new customer with confidence. If the merger is approved, it will create even more opportunities for us as a combined entity to drive value for Australian consumers.
The deal still awaits formal approval from the Australian Competition and Consumer Commission (ACCC), though they have received informal clearance, though they will also be seeking approval from the Foreign Investment Review Board as well.
Developing….(A media call is currently in progress).