The TPG Telecom Ltd (ASX: TPM) share price was rung up by more than 10% after the telco received the news about its appeal to merge with Vodafone Australia.
The appeal decision
The Federal Court decided that a merger between TPG and Vodafone Australia would not lessen competition in the mobile market, so therefore the merger should be allowed to go ahead.
It’s not 100% confirmed because it still requires regulatory approval, and the ACCC has 28 days to appeal the decision. Although ACCC boss Rod Sims’ statement didn’t convey the message that the decision would be challenged, “Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed.”
How did Vodafone Australia and TPG respond?
The share price of Hutchison Telecommunications (Aus) Ltd (ASX: HTA), which owns half of Vodafone Australia, rose by 14.3% today.
Vodafone Hutchison Australia CEO Inaki Berroeta said: “We have ambitious 5G rollout plans and the more quickly the merger can proceed, the faster we can deliver better competitive outcomes for Australian consumers and businesses.”
The initial 650 5G sites will be located in Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra and the Gold Coast.
It is hoped that the merger will be completed by mid-2020 if things go according to schedule.
TPG Executive Chairman David Teoh said: “TPG is very pleased with the Federal Court decision and looks forward to combining with VHA to create Australia’s newest fully integrated telecommunications operator. We will work to finalise the other conditions to the merger as soon as possible.”
Is TPG a buy?
With the TPG share price going up 10% today and up 15.7% over the past month, I think the quick money has been made. There are attractive synergies from the combined business, and bigger dividends, but we don’t know a lot about how profitable 5G will be for the telcos yet, so I wouldn’t jump to buy this week.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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