Capacity broke the news earlier this month with the deal at the time being described as a 50-50 venture, creating Australia’s third biggest operator.
Once completed MergeCo will create stronger competition for Telstra and Optus in Australia, with an integrated fixed and mobile offering. It will also be better placed to invest in next-gen mobile and fixed networks, and drive innovation in the Australian market.
“This transaction accelerates Vodafone’s converged communications strategy in Australia and is consistent with our proactive approach to enhance the value of our portfolio of businesses,” said Nick Read, CEO-designate, Vodafone. “The combined listed company will be a more capable challenger to Telstra and Optus, and will be much better placed to invest in next generation mobile and fixed line services to benefit Australian consumers and businesses.”
The two parties have identified a number of cost synergies from the combined networks, rationalisation of duplicated costs and economies of scale. In addition, the new entity will benefit from revenue synergies through cross selling of products across both VHA and TPG’s corporate and consumer customer bases.
North Vodafone and Hutchison Telecommunications Limited will each own 20.05% in MergeCo, with TPG shareholders owning the remaining 49.9%. The merger indicates an enterprise value of A$7.5 billion for VHA. MergeCo already has a pro forma enterprise value of approximately A$150 billion, revenue of over A$6 billion, EBITDA of over A$1.8 billion and operating free cash flow of A$0.9 billion.
Sitting on the board of MergoCo is David Teoh, as chairman, who is currently CEO and chairman of TPG; Iñaki Berroeta as managing director and CEO, who is currently CEO of VHA. In addition to existing TPG directors Robert Millner and Shane Teoh, plus 2 nominees of Vodafone, 2 nominees of HTAL and 2 new independent directors, how have yet to be named.
