Is Vodafone next on the telco chopping block?

Will TPG Telecom Limited (ASX:TPM) go after Vodafone Hutchison Australia next? One expert thinks so

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Australia’s third-largest mobile phone network, Vodafone, could end up in the hands of a fixed-line broadband business as early as next year according to an expert.

Vodafone Hutchison Australia is predicted to be bought out or merged according to NBN Co director Simon Hackett and iiNet Limited (ASX: IIN) founder Michael Malone. iiNet is currently under a takeover offer from rival TPG Telecom Limited (ASX: TPM).

Speaking at an event in Sydney today, Mr Hackett predicted more consolidation in the telecommunications market, and expects Telstra Corporation Ltd (ASX: TLS), Optus – owned by Singapore Telecommunications Ltd (ASX: SGT), TPG, iiNet and M2 Group Ltd (ASX: MTU) to be Australia’s five leading internet service providers.

He also added, “Some sort of marriage between Vodafone and [one of the above] makes sense. We will see more consolidation here, but not a heck of a lot. We’re running out of consolidation targets here.”

Mr Malone was even bolder, predicting there would be just three fixed-line internet providers within the next 12 months. “Those five players control 97% of the market. In my opinion, there will be three players in a year, and one that has failed.”

He didn’t mention which one he thought would fail, but given his disdain for TPG’s bid for his old company iiNet, maybe it’s TPG or perhaps Optus? Despite that, Mr Malone also thought Vodafone would most likely be bought out by TPG Telecom.

That would make sense – TPG would then be on virtually equal footing with Optus and Telstra, with all three offering both fixed line and mobile networks. Where that leaves M2 Group is unclear. It also raises questions about the merged Vocus Communications Limited (ASX: VOC) / Amcom Communications Limited (ASX: AMM) business, which mainly provides backhaul fibre networks.

Vodafone’s spokesperson suggested a takeover of the mobile network company was pure speculation. Vodafone is jointly owned by Vodafone Australia and Hutchison Telecommunications (Aus) Ltd (ASX: HTA).

Mr Hackett also predicted that commercial television would all but perish by 2020 as internet streaming – such as video streaming on demand (VSOD) services Netflix, Presto and Stan – took off.

By 2020, there’s not going to be much left of commercial television,” he said. “This idea that people will watch ads to pay for TV is not going to last much longer“. It’s something we’ve been warning about for some years.

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Motley Fool writer/analyst Mike King owns shares in TPG Telecom, Telstra, M2 Group, Vocus and Amcom. You can follow Mike on Twitter @TMFKinga The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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