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TPG and Vodafone in talks to merge

TPG has sucked up companies like iiNet in the past, but says a deal with Vodafone would be a "merger of equals."

tpg-vodafone
CNET

Australia's telco market could soon get just a little bit smaller. 

TPG and Vodafone Hutchison Australia have confirmed Wednesday they are in "exploratory discussions" to merge. TPG confirmed the news with an announcement to the Australian Securities Exchange this morning, noting there is "no certainty that any transaction will eventuate or what the terms of a transaction would be."

Neither company is commenting on what a merger would look like, whether the two telco brands would continue in their own right or whether they'd unite to form a single brand under one name.

However, TPG said the companies were treating it as a "merger of equals."

Vodafone and TPG have strong names in mobile and fixed broadband respectively, but both companies have been expanding in recent months, with TPG pushing hard into mobile (offering six months of free data to lure customers) and Vodafone starting to sell NBN (with a 4G backup to win over disgruntled NBN users).

But what exactly a TPG-Vodafone merger would mean for staff and customers -- particularly when it comes to customer service --  remains to be seen. TPG, owned by publicity-shy businessman David Teoh, scooped up iiNet in 2015, leading to the departure of high-level iiNet executives and reportedly resulting in widespread redundancies and the offshoring of call centres to South Africa, according to an investigation by Lifehacker Australia. The following year, iiNet recorded its highest level of customer complaints in six years.

TPG certainly wants a bigger slice of the telco pie in Australia, particularly when it comes to mobile, and it's working hard to win over potential customers. There's no doubt a merger would make sense for two companies that are both strong in their own wheelhouse, but looking to break into new telco markets.

But for now, the talks continue.