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Vodafone Hutchison Australia and TPG Telecom merge



MELBOURNE, Australia Telecommunications Company

TPG telecommunications
Ltd.


TPM 18.15%

merge with the rival

Vodafone


VOD 0.44%

Hutchison Australia to challenge the two major operators of the country.

The merger will create a company with an enterprise value of approximately $ 1

5 billion ($ 11 billion), bringing together more than 1.9 million fixed-line customers from TPG and approximately 6 million mobile subscribers from Vodafone Hutchison.

Australian telecom operators have been facing intense competition in recent years as the Canberra government introduces its nationwide broadband network, which sells capacity to operators. TPG, which wanted to build a low-cost mobile network last week, announced its exploratory talks with Vodafone Hutchison.

The Australian market is dominated by

Telstra
Corp.

and

Singapore Telecommunication
Ltd.

Optus, said Inaki Berroeta, CEO of Vodafone Hutchison.

"Together, TPG and VHA will provide greater market competition and greater choice for Australian consumers and businesses over fixed broadband and mobile," said Berroeta.

The merged entity will be 50.1% owned by Vodafone Hutchison, a 50-50 company between the United States

Vodafone Group


VOD 0.44%

PLC and an Australian company controlled from Hong Kong

CK Hutchison Holdings
Ltd.


0001 -1.26%

The remaining shares are held by the shareholders of TPG.

The Joint Undertaking will be known as TPG Telecom; It will be listed on the Australian Stock Exchange. TPG and Vodafone Hutchison expect significant cost savings and revenue synergies through cross-selling products.

David Teoh, currently CEO and Chairman of TPG, will be chairman of the combined company and Mr. Berroeta will be general manager and CEO.

The National Broadband Network has become the core of TPG's main fixed-line business, and the company has spent around A $ 1.26 billion to purchase the unallocated mobile bandwidth used in the current fourth-generation networks.

The two companies said they would jointly bid for capacity for the upcoming 3.6-gigahertz government auction, which will be used for so-called 5G networks.

TPG also said it would outsource its Singapore mobile business to its shareholders.

The company said they expect the home business to be completed next year.

Write to Robb M. Stewart at robb.stewart@wsj.com


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