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VHA/TPG merger nears completion as TPG’s Singapore interests stripped out

Inaki Berroeta VHA.jpg

Australia’s TPG Telecom will demerge its Singapore interests into a new company before completing its own merger with Vodafone’s Australian business.

The merged company formed by Vodafone Hutchison Australia (VHA) taking over the Australian operation of TPG Telecom will own subsea interests including PPC-1 and SEA-US, plus capacity on the Southern Cross cable.

Iñaki Berroeta (pictured), CEO of VHA, who will be CEO of the merged company, said: “Subject to TPG shareholder approval and final court approval, we will soon be bringing together VHA and TPG to create Australia’s leading challenger full-service telecommunications provider.”

The deal will be completed on 29 June, the companies have announced. It was much delayed because of opposition from regulatory authorities, finally overturned by the courts

Berroeta added: “The merger will combine highly complementary network infrastructure and leading mobile and broadband talent, and accelerate the network investments made by both companies.”

The Australian merged company will retain the name TPG Telecom. Vodafone group and CK Hutchison of Hong Kong will each have 25.05%. David Teoh, the CEO of the current TPG, will have 17.12%. he will be chairman of the merged company.

But the surprise is that TPG Telecom has decided to separate out its Singapore interests into a new company, to be called Tuas, which will take over TPG’s newly built 4G network.

This is a business facing difficulties, having moved into Singapore at a time when existing mobile providers have saturated the market. Worse, it failed to win one of Singapore’s two 5G wholesale licences, though it will be able to acquire capacity from the victorious wholesalers.

Singapore’s Infocomm Media Development Authority (IMDA) last month awarded on 5G licence to Singtel and the other to a joint venture of M1 and Starhub.

Teoh told the Australian Financial Review: “It is important to note that TPG Singapore is yet to generate significant revenue and should be viewed as an early stage business and a speculative investment.”

He added: “Its future success will depend on (among other things) successfully transitioning from its free trial customers to paying customers, and acquiring new paying customers, which is required to build a sustainable and recurring revenue base, and the evolution to 5G.”

 

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