SYDNEY • Vodafone Hutchison Australia and TPG Telecom announced plans yesterday to merge into a A$15 billion (S$15 billion) unit to take on key rivals Telstra and Optus as competition heats up in the telecommunications sector.

Under the proposal, Vodafone Australia - privately owned by Hong Kong-based CK Hutchison and Britain's Vodafone Group - will hold the majority stake at 50.1 per cent. TPG shareholders would own 49.9 per cent of the entity, which will be called TPG Telecom and listed on the Australian Securities Exchange (ASX) with a combined revenue of over A$6 billion.

"With this merger, we will be a more formidable competitor against Telstra and Optus," said TPG chairman David Teoh.

It will allow the two firms to better invest in and drive innovation and product improvement to give customers more choice, they said.

TPG is an ASX-listed telecommunications provider and is one of Australia's largest Internet service providers. It has a fixed-line residential subscriber base of over 1.9 million users and significant corporate, government and wholesale business. Its share price surged more than 11 per cent in morning trade on the news.

Vodafone Hutchison Australia is the nation's third-largest mobile operator with around six million subscribers. Its chief executive Inaki Berroeta will be chief executive of the merged business, while Mr Teoh will be chairman.

The deal is expected to be completed next year, subject to approval from regulators.

Separately, TPG said it planned to spin off to its shareholders its mobile business in Singapore, with further details to be given at a later date.

AGENCE FRANCE-PRESSE