TPG, VHA exploring "merger of equals"

By Dylan Bushell-Embling
Thursday, 23 August, 2018

TPG, VHA exploring "merger of equals"

Both TPG Telecom and Vodafone Hutchison Australia (VHA) have confirmed they are in preliminary discussion regarding a potential merger between the two companies.

In a statement to the Australian Stock Exchange, TPG confirmed that it has engaged in exploratory discussions with Vodafone regarding a potential “merger of equals”.

VHA meanwhile noted that the discussions are currently non-binding and no commitment has been made, while 50/50 owner Hutchison Telecoms Australia has also confirmed it is aware of the negotiations.

TPG has expanded rapidly through multiple acquisitions and there has been speculation for years that the ISP may place a bid for Vodafone Australia. The company is Australia’s second-largest fixed broadband provider with an estimated 1.92 million subscribers.

TPG already offers 4G mobile services over the Vodafone network as a mobile virtual network operator (MVNO), while Vodafone sources dark fibre connectivity from TPG to link up its mobile sites.

But TPG had recently announced plans to enter the mobile market in earnest as Australia’s fourth player. The company’s market value has reportedly halved since September last year as a result of falling broadband profits associated with the nbn rollout.

Its proposed merger with Vodafone Australia could disrupt this plan but give TPG an alternate avenue for growth into the mobile market.

VHA meanwhile operates the Vodafone brand in Australia, and has been consistently making but generally narrowing its losses as the company slugs it out with Telstra and Optus. The addition of TPG’s resources could help the company better compete against its larger rivals.

Vodafone currently has around 5.69 million customers, or 5.98 million including its MVNO partners’ customers.

Meanwhile, Optus may also be feeling the heat of increased competition in the sector. The operator has announced plans to slash another 440 jobs, after already announcing over 600 job cuts in May.

The Communications Electrical Plumbing Union (CEPU) has strongly opposed the Optus decision, which it said was announced without any consultation from the union.

“Optus management is showing clear contempt for its workforce by continuing to slash hundreds of jobs with absolutely no consultation with the workforce, while they’ve been sitting at the table with the union to bargain for a new enterprise agreement,” CEPU Communications Union National President Shane Murphy said.

“Optus has now axed over 1000 jobs in four months. This is a disgrace...Their timing of these continuous and enormous job cuts demonstrates a reprehensible contempt for the Optus workforce.”

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