TPG shares soar 5.9% as $15bn merger court case looms

Here’s everything you need to know about the hotly debated, and currently stalled, $15bn TPG-Vodafone merger.

TPG share price – the last 12-months at a glance

The TPG Telecom Ltd (ASX: TPM) share price has faced a volatile 12-months, following an announced and subsequently rejected merger with Vodafone.

TPG first announced plans to merge with Vodafone last August. The combined value of the merged company would exceed A$15bn.

As TPG argued in its initial media release, the:

‘Merger will provide scale and financial strength to compete more effectively with Telstra and Optus, and be better able to invest and drive innovation, service and product improvement to benefit Australian telecommunications customer.’

ACCC weighs in

In response to TPG's proposal, the Australian Competition and Consumer Commission (ACCC) blocked the merger, citing reduced competition in the mobile space as a key concern.

The TPG Telecom Ltd share price fell sharply in response to the ACCC’s block and has traded flatly ever since.

At the time – Rod Sims – Chair of the ACCC, argued that:

‘TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services.’

Mind you, TPG ceased building its own mobile network after the Australian government banned the use of Huawei telecommunications equipment.

Unsurprisingly, last week, when TPG Telecom revealed its FY19 results, the impact of these interwoven events became clear.

For example, while TPG’s revenue was just a shade lower than it was in FY18, coming in at A$2,477m – the telco’s profits crashed.

Here, TPG reported FY19 earnings (NPAT) of A$173.8m – some 56% lower than the previous corresponding period – as impairment costs from the halted rollout of its mobile network swelled.

Where to next for TPG?

Though TPG’s FY19 results look underwhelming, the company has been proactive in pushing back against the ACCC’s decision to block its proposed merger.

Shortly after the ACCC’s decision, TPG-Vodaphone announced that they would fight the regulator's decision in Federal Court.

Now, some four months later, court proceedings are set to commence tomorrow in Melbourne to determine whether the A$15bn TPG-Vodafone merger will be allowed to go ahead.

The case will be led by Justice John Middleton; with Michael Hodge, of Hayne Royal Commission fame, set to represent the ACCC.

As the Australian Financial Review aptly pointed out – Justice John Middleton, the man leading the case – will seek to determine a relatively simple question: ‘will the merger be bad for competition in the retail mobile market?’

Final thoughts: TPG share price gets a bump

If today’s share price action is anything to go by – which saw the TPG Telecom Ltd share price surge 5.9% – the market may just believe that TPG has a good shot at winning its federal court case.

Even so, investor sentiment appears significantly more fickle when a broader view is taken. Year-to-date, TPG’s shares have significantly underperformed the broader market, rising just 2% in that period.

Practise trading TPG and other telecommunications stocks with an IG demo account now

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.