Vodafone Australia and TPG Telecom Ltd (ASX: TPM) have announced on Thursday that they have agreed to merge into a single $15 billion telecommunications firm.
In an effort to more effectively challenge telecoms giants Telstra Corporation Ltd (ASX: TLS) and Optus, the two companies confirmed to the ASX they plan an all-scrip, merger-of-equals, following discussions last week.
Under the deal, TPG shareholders will own 49.9%of the group, with Vodafone Australia shareholders owning 50.1%.
The merged company – to be called TPG Telecom Limited – will have a combined value of about $15 billion and annual revenue of $6 billion.
TPG is Australia’s second largest internet service provider with more than 1.9 million subscribers, while Vodafone is the third largest mobile operator with 6 million subscribers.
Current Vodafone Australia CEO Inaki Berroeta said the merged group will become a stronger challenger to bigger rivals Telstra and Optus.
“The combination of the two companies will create an organisation with the necessary scale, breadth and financial strength for the future,” Mr Berroeta said in a statement.
“The equal terms of the combination preserves the competitive strengths of the two businesses, meaning a sustainable long-term fixed/mobile competitor to Telstra and Optus.”
The big winners of the merger would be Australian consumers, he added.
Mr Berroeta is expected to stay on as CEO of the merged group, while TPG CEO and chairman David Teoh will become chairman.
The merger deal is expected to be completed next year, subject to approval from regulators including the Foreign Investment Review Board and competition watchdog.
Parallel to the merger agreement, TPG and Vodafone Australia have also signed a joint venture agreement to acquire a 5G spectrum at an auction by the federal government later this year.