TPG, VHA investigates "merger of equals"

TPG, explore VHA

Both TPG Telecom and Vodafone Hutchison Australia (VHA) have confirmed that they are in a first discussion about a possible merger between the two companies.

In a statement to the Australian Stock Exchange, TPG confirmed that it had exploratory talks with Vodafone about a possible "merger of equals".

In the meantime, VHA noted that the discussions are currently not binding and that no commitment has been made, while 50/50 owner Hutchison Telecoms Australia has also confirmed that he is aware of the negotiations.

TPG has rapidly expanded through several acquisitions and it has been speculated for years that the ISP can make an offer on Vodafone Australia. The company is the second largest fixed broadband provider in Australia with an estimated 1.92 million subscribers.

TPG already offers 4G mobile services via the Vodafone network as a mobile virtual network operator (MVNO), while Vodafone uses Dark Fiber connectivity from TPG to connect its mobile sites.

But TPG had recently announced plans to enter the mobile market as the fourth player in Australia. The market value of the company is reportedly halved since last September due to declining broadband profits associated with the rollout of nbn.

The proposed merger with Vodafone Australia could disrupt this plan, but offer TPG an alternative opportunity to grow into the mobile market.

VHA now operates the Vodafone brand in Australia, and has consistently made losses, but is generally limited, while the company is wiping it out with Telstra and Optus. The addition of TPG's resources could help the company to compete better with its larger competitors.

Vodafone currently has approximately 5.69 million customers, or 5.98 million, including the customers of its MVNO partners.

In the meantime Optus may also suffer from the increased competition in the sector. The operator has announced plans to scrap another 440 jobs after having announced more than 600 jobs in May.

The Communications Electrical Plumbing Union (CEPU) strongly opposed the Optus decision, which was said to have been announced without consultation with the trade union.

"The Optus management clearly shows contempt for its staff by continuing to cut hundreds of jobs without absolute consultation with the workforce, while they have sat at the table with the union to negotiate a new company agreement," CEPU Communications Union National President Shane Murphy said .

"Optus has now deleted more than 1,000 jobs in four months, which is a disgrace … Their timing of this ongoing and massive job loss shows a reprehensible disregard for Optus employees."

Image credit: © / au / bas121

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