Australia's telco market will be getting smaller after TPG and Vodafone announced a AU$15 billion merger Thursday morning.
Vodafone Hutchison Australia (VHA) is the nation's third largest mobile operator with a customer base of around 6 million subscribers.
Illustrating the potential benefits of the merger is an agreement to form a joint venture, regardless of whether the merger is implemented, to bid for 5G spectrum in the auction of 3.6 GHz spectrum scheduled for November and to jointly acquire spectrum in future.
Shares in TPG jumped 15 percent to a near two-year high in early trade, while tightly-held Hutchison shares soared 48 percent to their highest price in 11 years.
"The combination of these assets will maximise the opportunities presented by convergence and best position the combined company to invest in 5G technologies that will deliver faster services and offer more competitive value propositions", a joint release to the ASX says.
The consolidation, unanimously recommended by TPG's board, comes amid intensifying competition in Australia's telecommunications industry. The rest is split evenly between Vodafone's two Australian owners, Vodafone Group and Hutchison Telecommunications (Australia) (HTA.AX).
TPG has shaken up Australia's fixed-line internet market.
The Directors of TPG unanimously recommend that TPG shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding that the Merger is in the best interests of TPG shareholders. Vodafone has a sizeable mobile network with a mobile customer base of approximately 6 million subscribers as of June 2018.
"These two businesses are very different but extremely complementary", Mr Berroeta said.
Nick Read, CEO-designate, Vodafone Group Plc, said: "This transaction accelerates Vodafone's converged communications strategy in Australia and is consistent with our proactive approach to enhance the value of our portfolio of businesses".
As part of the deal, TPG said it also would spin out its Singapore mobile business, separating it from the new merged company.
Vodafone Australia CEO Inaki Berroeta said the merged group will become a stronger challenger to bigger rivals Telstra and Optus.