Photo: Matej Divizna/Getty Images
- The TPG Telecom and Vodafone Hutchison merger will have 20% of the mobile phone market and 22% of fixed line.
- The $15 billion company will face up against $51 billion at Telstra.
- Together the companies own and operate 27,000km of fibre networks and a mobile network with 5000 sites.
The merger of TPG Telecom Limited and Vodafone Hutchison is all about creating a competitor big enough to grab market share from the two market leaders, Telstra and Optus.
Expect aggressive discounting when the merger deal is completed next year, compounding .
The companies say the enterprise value of the merged group will be about $15 billion, with revenue of more than $6 billion.
Billionaire David Teo, the founder of TPG, says the increased financial scale will create a formidable competitor against Telstra and Optus.
He says the new company will be “agressive”.
“Together we will become a more effective industry challenger that strives to create competitively-priced consumer products with the high levels of customer service that differentiates us in the market,” he says.
The market liked the deal, with TPG shares up almost 10% to $3.275 in early trade.
However, shares in Telstra, which has the most to lose, were up 4.3% to $3.275.
Here’s how the new merged company sees itself against Telstra and Optus:
Image: TPG-Vodafone Hutchinson presentation
Together the companies own and operate 27,000km of metropolitan and inter-capital fibre networks, a mobile network with 5,000 sites, international capacity and a strategic portfolio of spectrum assets.
TPG has Australia’s second largest fixed line residential subscriber base of 1.9 million subscribers and a significant corporate, government and wholesale business. TPG is also building its own $1.9 billion mobile network, to be Australia’s fourth carrier.
Vodafone Hutchison (VHA) is Australia’s third largest mobile operator, owned 50/50 by parent entities Vodafone Group Plc and Hutchison Telecommunications, with 6 million subscribers.
Here’s an overview:
Image: TPG-Vodafone Hutchinson presentation.
The companies say the merger will deliver increased scale to support growth, and an enhanced ability to invest and innovate in a highly competitive telco market: