$8 Billion Merger To Face Australian Competition Announced By Vodafone

The telecom market in Australia is preparing to shift to faster mobile networks and Vodafone feels that it would be able to better compete with the Australian telecom giants in that market with the help of an $8 billion merger.

Telecons Telstra and Optus are ahead of Vodafone as mobile operators in the Australian market. The two rival companies of Vodafone also have big fixed-line internet operations.

On Thursday, Vodafone announced its partnership with TPG which is a major fixed-line broadband provider.

“With this merger, we will be a more formidable competitor against Telstra and Optus,” TPG’s billionaire founder and chairman, David Teoh, said in a statement.

The companies said that the merged business will be better placed “to invest in 5G technologies that will deliver faster services.”

Many analysts feel that the partnership would work well because Vodafone is amongst the biggest wireless network providers in the world while TPG has created flutter in the Australia’s fixed-line internet market in recent times. The Australian partner of Vodafone had announced last year its intention to cerate a mobile network also in the country.

10.9 billion Australian dollars ($8 billion) excluding debt would be the valuation of the combined Australian company. TPG will own 49.9 percent of the business, and Vodafone’s Australian unit which is a joint venture with Hong Kong’s CK Hutchison, will own the rest.

The companies said that the new joint venture would also apply for a bid for a portion of Australia’s 5G spectrum during a governmental auction slated to come up soon.

There would be no change in the respective brand names of the companies in Australia for the time being, the companies announced.

The deal has been welcomed by investors. There was an increase of 16 per cent in the shares of TPG shot up 16%, while there was 52 per cent rise in the shares of Hutchison Australia Telecommunications that is the owners of the CK Hutchison’s stake in the Vodafone Australia business.

There has been challenges among the telecommunications industry in Australia in adapting to the changes in telecom technology and the shifting demands form the consumers of the services.

Cutting of 8000 jobs in the company was announced by Telstra in June. The company said at that time that this was an attempt by the it to bring down operational costs. On the other hand, 36 stores throughout Australia has bene closed down by Optus. Additionally, it has also ended its Virgin Mobile service and more than a thousand jobs have been cut by the company so far this year to bring down costs.

(Source:www.money.cnn.com)

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