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Vodafone bets on $8 billion merger

01 September, 2018, 15:30 | Author: Janis Wilson
  • It can be yours. Well a bit of

"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 to benefit Australian consumers and businesses".

The merger is expected to complete sometime next year, with TPG shareholders owning 49.9 percent of the merged group and Vodafone shareholders owning the remaining 50.1 percent.

There have been whispers of a merger between Vodafone Hutchison Australia (VHA) and TPG in the wind over the last few days, but those rumours have now been confirmed. Stocks in TPG Telecom hopped 18%.

The $15bn merger will bring together Vodafone's mobile network and nearly six million mobile customers with TPG's extensive fixed-line broadband services which boasts 1.9 million residential subscribers as well as corporate, government and business customers. TPG sits behind Telstra as the biggest broadband provider in the country, but has been looking to shore up its mobile services in Australia in recent months.

Vodafone Hutchison's shares jumped as high as 76% upon the news, while TPG shares climbed 22%, positioning the company as one of the top gainers on the index.

Vodafone has agreed a mammoth 15 billion Australian dollar (£8.4 billion) deal to merge its Australian operations with TPG Telecom.

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"[With this merger] we will be a more formidable competitor against Telstra and Optus", TPG founder David Teo said in a statement. Vodafone will provide a guarantee on approximately A$2.4bn of this debt, lower than the approximately A$3.3 billion guarantee that Vodafone now provides for VHA's debt.

TPG will hold the rest of TPG Telecom Limited, which will be recorded on the Australian Securities Exchange.

TPG CEO David Teoh will become the Chairman of the merged group, while VHA CEO Iñaki Berroeta will become managing director and CEO.

"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 blend of the two organizations will make an association with the fundamental scale, broadness and money related quality for the future", Vodafone Hutchison Australia's CEO Inaki Berroeta said in an announcement.

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