TPG and Voda­fone Aus­tralia plan merger

The Nation - - WORLD BUSINESS -

VODA­FONE Hutchi­son Aus­tralia and TPG Tele­com an­nounced plans yes­ter­day to merge into a Aus$15 bil­lion (Bt360 bil­lion) unit to take on key ri­vals Tel­stra and Op­tus as com­pe­ti­tion heats up in the telecom­mu­ni­ca­tions sec­tor.

Un­der the pro­posal Voda­fone Aus­tralia, pri­vately-owned by Hong Kong- based CK Hutchi­son and Bri­tain’s Voda­fone Group, will hold the ma­jor­ity stake at 50.1 per cent.

TPG share­hold­ers would own 49.9 per cent of the en­tity which will be called TPG Tele­com Lim­ited and listed on the Aus­tralian Se­cu­ri­ties Ex­change with a com­bined rev­enue of more than Aus$6 bil­lion.

“With this merger, we will be a more for­mi­da­ble com­peti­tor against Tel­stra and Op­tus,” said TPG chair­man David Teoh.

The so-called “merger of equals” will al­low the two com­pa­nies to bet­ter in­vest and drive in­no­va­tion and prod­uct im­prove­ment to give cus­tomers more choice, they said.

TPG is an ASX-listed telecom­mu­ni­ca­tions provider and is one of the coun­try’s largest in­ter­net ser­vice providers. It has a fixed-line res­i­den­tial sub­scriber base of over 1.9 mil­lion peo­ple and sig­nif­i­cant cor­po­rate, gov­ern­ment and whole­sale busi­ness.

Cus­tomers

Its share price surged more than 11 per cent in morn­ing trade to Aus$8.77 on the news.

Voda­fone Hutchi­son Aus­tralia (VHA) is the na­tion’s third largest mo­bile op­er­a­tor with a cus­tomer base of around 6 mil­lion sub­scribers.

Their merger is bad news for mar­ket leader Tel­stra, one of Aus­tralia’s largest em­ploy­ers which ear­lier this month warned of “enor­mous chal­lenges” ahead af­ter post­ing an 8.9 per cent slump in an­nual profit.

Chief ex­ec­u­tive Andy Penn warned in­tense com­pe­ti­tion for mo­bile cus­tomers and chang­ing mar­ket dy­nam­ics were hav­ing an im­pact on busi­ness.

In a bid to stay a step ahead of its ri­vals, Tel­stra plans to axe 8,000 jobs, a quar­ter of its work­force, to achieve more cost sav­ings and split its mo­bile and in­fra­struc­ture di­vi­sions into sep­a­rate busi­nesses.

VHA chief ex­ec­u­tive Inaki Ber­roeta said the merged com­pa­nies would pro­vide scale and fi­nan­cial strength to com­pete more ef­fec­tively with the likes of Tel­stra.

“The com­bi­na­tion of our two highly com­ple­men­tary busi­nesses and tal­ented em­ploy­ees will cre­ate a more sus­tain­able com­pany, with en­hanced ca­pac­ity to in­vest in new tech­nol­ogy and in­no­va­tion,” he said.

The deal is ex­pected to be com­pleted next year.

A man speaks into his phone at a Voda­fone store in Mel­bourne, Aus­tralia, as merger plans are an­nounced.

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