Published: Sun, September 02, 2018
Tech | By Constance Martin

Aussie shares rise as TPG and Vodafone announce merger

Aussie shares rise as TPG and Vodafone announce merger

The news of the merger will see the three companies combine to form a new company, TPG Telecom which will provide a notable challenge to Telstra and Optus who now dominate the Australian telecoms market.

Vodafone said the tie-up of Vodafone Hutchison Australia and TPG Telecom will create a "more powerful challenger to Telstra and Optus in Australia".

The company said it "assures customers they will continue to enjoy Vodafone's world-class mobile network, Vodafone nbn, and its value-packed plans and products following the announcement of a proposed merger with TPG".

Vodafone Australia - a joint venture between Hong Kong's Hutchison Whampoa and British parent Vodafone Group - is the third-largest mobile player in Australia, with six million subscribers.

The upcoming spectrum auctions for the 5G spectrum was called out in particular, with the two companies also forming a separate joint venture "to acquire, hold and allocate 3.6 GHz spectrum".

TPG will report its Fiscal year 2018 results on 18 September 2018. The rest is split evenly between Vodafone's two Australian owners, Vodafone Group and Hutchison Telecommunications (Australia) (HTA.AX).

The deal spells the end of the standalone union between Vodafone and CK Hutchison that won only 195 of Australia's mobile-phone market in nearly a decade.

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The Directors of TPG unanimously recommend that TPG shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding that the Merger is in the best interests of TPG shareholders.

Vodafone Group, Teoh and Hutchison would retain their holdings in the new company for at least two years, Vodafone said.

Separately, TPG said it planned to spin off to its shareholders its mobile business in Singapore, with further details to be provided at a later date.

There's now no word on what happens to existing TPG and Vodafone customers, but it's safe to assume that most legacy plans will be replaced with similar offerings from TPG Telecom Limited.

TPG is also in the process of building a mobile phone network, but with the Vodafone network poised to join TPG's business, analysts are asking does the merged company need this new network?

The Australian TPG was founded in the 1980s by David Teoh, originally as a distributor and sometimes manufacturer called Total Peripherals Group.

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