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Share Price: 75.62
Bid: 75.58
Ask: 75.62
Change: 0.84 (1.12%)
Spread: 0.04 (0.053%)
Open: 74.90
High: 75.90
Low: 74.52
Prev. Close: 74.78
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Vodafone agrees £8.4bn merger for Australian joint venture

Thu, 30th Aug 2018 07:08

(Sharecast News) - Vodafone has agreed to merge its loss-making Australian mobile joint venture with broadband provider TPG Telecom in a deal valuing the combined company at about A$15bn (£8.4bn). The UK phone group and its partner, Hutchison Telecommunications, will each own 25.05% of the merged company with the remaining 49.9% held by TPG shareholders.The deal values Vodafone Hutchison Australia (VHA) at an enterprise value of A$7.49bn and TPG at A$7.47bn giving a total value of A$14.95bn.The proposed new company, which will be called TPG Telecom, will be listed on the Australian stock exchange. It will combine VHA's near-6m mobile customers with TPG's fixed-line broadband services. Vodafone said the combined group would be better placed to challenge former phone monopoly Telstra and Optus in Australia.The companies predicted substantial but unspecified cost savings from combining operations and economies of scale. The merged company will also make revenue gains by cross-selling products between complementary customer groups, it said.Like in the UK, competition in the Australian mobile phone market is fierce. As handset costs rose and competition increased VHA's loss widened to A$92.3m in the six months to the end of June from A$81.5m a year earlier as average revenue per user fell 1.3%.Nick Read, Vodafone's chief financial officer, is due to take over as CEO on 1 October. The loss-making Australian business is one of a number of underperforming, disparate operations he must decide what to do with.Read said: "This transaction accelerates Vodafone's converged communications strategy in Australia and is consistent with our proactive approach to enhance the value of our portfolio of businesses. 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."David Teoh, TPG's chief executive and chairman, will chair the merged company and Iñaki Berroeta, CEO of VHA, will be managing director and CEO.
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