TPG, Vodafone confirm merger discussions

Potential ‘merger of equals’

TPG and Vodafone Hutchison Australia have confirmed they have engaged in “exploratory discussions” around a possible merger, with a combined entity potentially having more than 1.9 million fixed line customers and more than 6.1 million mobile customers.

“At this stage, these are exploratory non-binding discussions, with no commitment from VHA or its shareholders,” a VHA statement said.

The telcos are exploring a potential “merger of equals,” a TPG statement said.

“The TPG Board notes there is no certainty that any transaction will eventuate or what the terms of a transaction would be.”

VHA said that at this the two telcos are engaging in “exploratory non-binding discussions with no commitment from Vodafone or its shareholders.”

VHA, which operates in Australia as Vodafone, is a 50:50 joint venture between Vodafone and Hutchison Telecommunications.

VHA has been slowly been clawing its way to profitability, though in July it reported an increased loss of $92 million for its first half, up from a loss of $81 million in the six months to June 2017.

Rumours have about a possible takeover or merger between the two telcos have been rife for years.

Thanks to a 2015 deal, TPG is a major supplier of fibre connecting Vodafone mobile sites. Under a seperate deal announced at the same time, TPG is also a MVNO that sells mobile services on Vodafone's mobile network.

However, TPG is in the process of rolling out its own mobile infrastructure in Sydney and Melbourne and is preparing to shortly begin trials on its new network.

TPG in 2015 acquired iiNet, creating Australia’s second-largest broadband provider.

As of the end of January, TPG had 1.92 million broadband subscribers (including iiNet), as well as 421,000 mobile customers (again including iiNet).

As of the end of July, Vodafone said it had 5.98 million mobile subscribers on its network — of which 5.69 million were Vodafone customers.

Vodafone late last year made its fixed line broadband debut, launching NBN services.

The discussion of a possible merger comes as the rollout of the NBN continues to upend the Australian telco market. The nation’s largest telco, Telstra, is currently grappling with the impact of both the NBN and increased mobile competition.

TPG will announce its full year results on 18 September.