News: HTA UPDATE 1-Australia's TPG Telecom enters talks to buy local Vodafone-Hutchison venture, page-2

odafone and TPG consider merging: What could it mean for you?​

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Opinion: Vodafone and TPG are in talks to merge, but what would a combined supertelco actually mean for consumers?​

As reported by ZDNet, Vodafone Australia and TPG are in talks for a potential merger, with TPG reportedly calling it a "merger of equals".
ZDNet's report quotes a Vodafone media spokesperson as stating that "Vodafone Hutchison Australia (VHA) confirms it has commenced discussions with TPG in relation to a potential combination of the two highly complementary companies. At this stage, these are exploratory non-binding discussions, with no commitment from VHA or its shareholders."
Which means, for now, that there's not a whole lot more detail about what the combined entity might look like, or (if you're a shareholder) what the combined board might comprise of. However, it does bring up some potentially fascinating scenarios for the Australian telecommunications market, as well as the combined brands that TPG/Vodafone would control.​

I'm a Vodafone or TPG customer. What will it mean to me?​

Right now, the two companies are only in exploratory talks to merge.
It's a deal that's been rumoured for some time in telco circles, but it's hardly a done deal. For now, you can expect business as usual, at least until an actual merger takes place.
It's what happens then that could have significant impact on your usage of either TPG or Vodafone services.​

What happens to TPG's cheaper unlimited plans?​

TPG has announced intentions to trial out its new mobile network with unlimited plans at a price of $9.99 per month, way lower than anyone (including Vodafone) is offering right now.
It's an absolute certainty that a merged TPG/Vodafone would combine network resources, but would it keep to that kind of very low pricing if it didn't have to, or if it actively hurt the bottom line?​

Vodafone gains a lot of 5G, but maybe not much more network coverage​

Amongst the big three telcos, Vodafone has been the quietest when it comes to openly talking about its 5G ambitions, seemingly happy to let Telstra and Optus bicker about who's going to launch 5G "first" in Australia. The inevitable scenario there is that we'll see fixed-line-broadband replacement 5G in Australian metro areas in early 2019, some time before the first 5G handsets arrive at all.
TPG has significant spectrum holdings in its own right that cover both 4G and 5G implementations, as well as an expensive commitment to licensing that spectrum through to at least December 2028. Vodafone has for years struggled with the perception that it's the least available player in the local market, although adding TPG's spectrum doesn't automatically give it wider Australian coverage.
When TPG announced its own mobile network plans, it stated that its intention was to cover around 80% of the Australian population. That's well below the 96% coverage Vodafone claims, and it's clear from its trial plans that TPG's not been looking to push coverage as part of its wider strategy.
The practical upshot there is that Vodafone (and TPG Mobile) customers in metro areas might see a significant uptick in their network performance, but the combined network might still struggle in more remote areas.​

What happens to the brands?​

Vodafone is an internationally recognised brand, but in merging with TPG it would gain more than just the TPG brand. It would also instantly be running iiNet, Internode, AAPT, PIPE Networks, Chariot, Soul, IntraPower, RuralNet, TransACT and many more.
The combined entity would no doubt prefer to keep all those customers in order to cement its place in the Australian marketplace, but balancing all those differing plans, price points and customer service expectations could well be a difficult task.​

Vodafone's NBN goes a lot wider​

Vodafone has played it very slow and steady with its Vodafone NBN rollout as it extends across the country, but this is an area where TPG is very much already present and operating a wide variety of fast broadband services. Vodafone's notable in making its own 4G-fallback modem a mandatory part of its NBN packages, while TPG has (mostly) sold itself as a super-affordable, relatively no-frills service.
Vodafone also recently switched its NBN strategy around to no-commitment month to month plans, where TPG sits in the more traditional contract space.
There's little doubt that (presuming the merger goes ahead) that plans would stay as they are for simple contractual compliance reasons for a time, but at some point the combined company would need to settle on a single strategy to avoid falling into the kind of complex-too-many-plans hole that Telstra's currently digging itself out of as part of its Telstra 2022 strategy.
The combined entity would also have to deal with Kogan NBN's deal with Vodafone, which sees it as the exclusive provider of NBN services to the budget brand for the next few years, again providing both a revenue source but also potential customer competition to deal with.​

Will the ACCC let it happen?​

All of this presumes that the ACCC actually approves any eventual merger plan. A combined TPG/Vodafone may worry the ACCC, given that it would significantly reduce market competition, especially given TPG's stated aim to launch its own mobile network in Australia in the next year or so. Merging the two entities would keep the status quo at only three competing networks. Vodafone does have MVNO partners, but not a significant number of them compared to Telstra or especially Optus.
Where Vodafone would gain significantly would be in the broadband space, adding TPG's reported 1.92 million customers to its books, while on the TPG side, its roughly half-million mobile customers would join Vodafone's 5.98 million mobile subscribers.​