I know Telstra shareholders have been through a lot, but spare a thought for TPG/Vodafone, its almost the 2 year anniversary of their merger announcement with Vodafone, and they have only just managed to get it done.
And for what... the merger report says that if everything goes to plant, there will be a net $21.2m benefit to TPM shareholders... they probably spent a lot more than that on Lawyers.
That is counting benefits of a capital restructure that benefits the combined entity $267m by handing off $5,274.4 in debt to old Vodafone owners, reducing TPG debt to only $4.77B, on combined revenue of $5.9B, and that debt doesnt include any new expenditure on 5G.
But they will have $290m profit according to merger documents, and planned $300m in synergies. So there is potential for things to work out, but things could equally go pear-shaped, synergies can be a bit theoretical (as i learnt as a Vocus holder), and the merged entity is combining TPG that has 2nd biggest fixed line retail that has peaked for subscribers and has declining margins, with the worst mobile network.
They talk about cross-selling opportunities, but if there isnt any margin in NBN fixed line, then not much value from cross-selling the many Vodafone mobile customers across to TPG fixed line, and it will be hard to move the iiNet TPG mobile subscribers from Optus to Vodafone, or cross selling them to the worst network.
They could find themselves with reducing revenue and increasing debt, just like previous mobile mergers...
TLS Price at posting:
$3.36 Sentiment: Hold Disclosure: Not Held
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