TPG Telecom, Vodafone Australia plan to merge

Vodafone is to merge its Australian business with TPG Telecom creating a rival to the major operators Optus and Telstra

Vodafone is to merge its Australian business with TPG Telecom creating a rival to the major operators Optus and Telstra

David Teoh, who is now the CEO and chairman of TPG, will become the new group's chairman.

Vodafone Hutchison Australia and TPG Telecom announced plans yesterday to merge into a A$15 billion (S$15 billion) unit to take on key rivals Telstra and Optus as competition heats up in the telecommunications sector. Stocks in TPG Telecom jumped 18%.

It combines Australia´s third- and fourth-largest telecom firms into a larger third player holding TPG´s fibre network and Vodafone´s mobile system, sending shares on both sides of the deal soaring.

It would represent a "last chance" for Vodafone, which has struggled with network reliability issues since entering Australia in 1993, to make a serious bid for market share, he said.

Although TPG shareholders will own 49.9 percent (and VHA shareholders 50.1 percent), the new company will be called TPG.

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"The equal terms of the combination preserves the competitive strengths of the two businesses, meaning a sustainable long-term fixed/mobile competitor to Telstra and Optus". "We are confident that this merger will be highly beneficial to customers, shareholders and other stakeholders". It has a fixed-line residential subscriber base of over 1.9 million people and significant corporate, government and wholesale business.

Telstra chief executive officer Andy Penn said that intense competition for mobile customers and changing market dynamics were affecting business.

Reports claim that TPG executive chairman, David Teoh is set to be the chairman of the newly formed TPG Telecom Limited while Iñaki Berroeta is expected to remain as the boss of the merged company.

TPG's board unanimously backed the merger, which requires shareholder and regulatory approval, and the companies said they hoped to complete it in 2019.

Shares of the country's steelmakers rose on that announcement, with Hyundai Steel closing up by 0.6% while Posco saw gains of 0.3%.

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