Vodafone, TPG Telecom to merge to take on rivals in Australia

Vodafone Hutchison Australia and TPG Telecom have decided to combine their businesses as part of Vodafone’s converged communications strategy to take on rivals Telstra and Optus in Australia.
Vodafone and Hutchison Telecommunications (Australia) will own 25.05 percent stake each, while TPG will own the balance 49.9 percent in the merged entity called TPG Telecom that will be listed on the Australian Securities Exchange (ASX).

TPG Telecom will have an enterprise value of A$15.0 billion, revenue of over A$6.0 billion, EBITDA of over A$1.8 billion and OpFCF of A$0.9 billion.

“The combined listed company will be a more capable challenger to Telstra and Optus, and will be much better placed to invest in next generation mobile and fixed line services,” Nick Read, CEO-designate, Vodafone, said.

A Statista report said Telstra has 43 percent share followed by 28 percent share for Optus and 18 percent share for Vodafone in 2017.
David Teoh, currently CEO and chairman of TPG, will be the chairman and Inaki Berroeta, current CEO of VHA, will be the managing director and CEO of TPG Telecom, Vodafone said in a statement.

Vodafone Hutchison Australia and TPG Telecom will also bid for 5G spectrum in 3.6 GHz spectrum band during the next round of auction in late November 2018. The Government of Australia is auctioning 125 MHz of 3.6 GHz band spectrum.

Earlier, Australia blocked China based telecom equipment maker Huawei from supplying 5G telecom equipment citing security issues.

Vodafone did not reveal its plans on future investment or possible job cut. Vodafone India is currently cutting jobs ahead of the formal merger with listed Idea Cellular.