TPG Telecom, Vodafone Hutchison Australia merge to battle Singtel's Optus, Telstra

RMSotheby’s  Simon Clay

Two of Australia's largest telco companies are joining forces in a a landmark $15 billion merger.

The companies have confirmed to the ASX they plan an all-scrip merger of equals.

"With this merger, we will be a more formidable competitor against Telstra and Optus", TPG's billionaire founder and chairman, David Teoh, said in a statement.

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 now the third largest mobile telco with their recent financial announcement listing nearly 6 million subscribers.

The new company, to be called TPG Telecom, would unite TPG - best known locally for its fixed-line broadband services, although it has also been working to build its own CBD-based 4G mobile network - with the nearly 6 million mobile customers of Vodafone Hutchison, which ranks as Australia's third-largest mobile operator.

TPG is an ASX-listed telecommunications provider and is one of the country's largest internet service providers.

The board of the merged entity will comprise Teoh, Berroeta, TPG directors Robert Millner and Shane Teoh, two nominees each from TPG and Vodafone, and two new independent directors.

The merged company will take on a "multi-brand strategy", using the Vodafone brand as well as the three TPG businesses, he added.

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The Merger with VHA represents an exciting step-change in TPG's evolution, and will benefit both our shareholders and Australian consumers alike.

The merger is expected result in "substantial cost synergies" and allow the companies to maximise opportunities to invest in 5G technology.

The merger is expected to complete next year, and is dependent on shareholder and regulatory approvals.

VHA CEO Iñaki Berroeta said that the merger will "provide stronger competition in the market and greater choice for Australian consumers and enterprises across fixed broadband and mobile".

"We will also explore likely impacts in related markets, such as spectrum acquisition markets, wholesale services, and mobile roaming".

Parallel to the merger agreement, TPG and Vodafone Australia have also signed a joint venture agreement to acquire a 5G spectrum at a federal government auction later this year.

Berroeta said: "The Australian telecommunications market is characterised by the presence of Telstra and Optus".

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