Australia's second largest internet provider, TPG, and the nation's third largest mobile operator, Vodafone, are still awaiting approval of the proposal.
The two companies confirmed to the ASX they plan an all-scrip, merger-of-equals, following discussions revealed by TPG last week.
TPG jumped 18% to A$9.31 in Sydney, valuing it at A$8.6 billion.
TPG is also in the process of building a mobile phone network, but with the Vodafone network poised to join TPG's business, analysts are asking does the merged company need this new network? Additionally, the combined entity will benefit from revenue synergies through cross-selling of products across both VHA and TPG's corporate and consumer customer bases.
Vodafone has promised that its popular $5/day global roaming deal will remain after the proposed merger with broadband telco TPG.
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David Teoh, now CEO and chairman of TPG, will be the chairman and Inaki Berroeta, current CEO of VHA, will be the managing director and CEO of TPG Telecom, Vodafone said in a statement. David Teoh, who is now the CEO and chairman of TPG, will become the new group's chairman.
Although the pair have stated there would no notable changes to either of the brands after the merger, the opportunity to cross-sell Vodafone's mobile and TPG's broadband offering could mount a serious challenge to the domination of Telstra and Optus who control more than 80% of the mobile market as it stands.
VHA CEO Iñaki Berroeta will be the managing director and chief executive of the merged group, while TPG CEO and chairperson David Teoh will be the chairperson.
Shares were trading 2% lower after the announcement.
TPG will hold the remainder of TPG Telecom Limited, which will be listed on the Australian Securities Exchange.
The merger will create a much stronger integrated competitor for Telstra and Optus but will also mean the long-standing status quo of three mobile competitors, which had been threatened by TPG's mobile network build, will be preserved and the threat of disruptive infrastructure overcapacity dispelled.