Earlier this month, Australian telecom group Vocus accepted a $2.7 billion (AUD3.5 billion) takeover offer from a consortium comprising Macquarie Infrastructure and Real Assets and the pension fund Aware Super.
The deal is the latest in a series of Oceania-focused telecom takeovers.
Today, we go Down Under to review the biggest deals of the last two years and examine how M&A activity has shaped the market over the last decade.
Vodafone New Zealand
Deal Value: NZD3.4 billion ($2.3 billion)
Buyer: Infratil and Brookfield Asset Management
Seller: Vodafone Group
Sale Date: July 2019
July 2019 saw the conclusion of the takeover of Vodafone New Zealand by domestic infrastructure investor Infratil, which was backed by Canada’s Brookfield Asset Management.
By sealing the $2.3 billion (NZD3.4 billion) deal, Infratil managed to fend off interest from international investment firms including Blackstone, KKR, and TPG Capital—two of which were said to have placed higher bids for the telco.
By sealing the $2.3 billion (NZD3.4 billion) deal, Infratil managed to fend off interest from international investment firms including Blackstone, KKR, and TPG Capital—two of which were said to have placed higher bids for the telco.
While Vodafone Group’s desire to streamline its international portfolio was something of an open secret, the speed with which the deal was completed was a genuine surprise. Infratil confirmed that talks were underway in May 2019 and the deal concluded just two months later.
Experts suggested that the template for Infratil’s buyout of Vodafone was its 2010 acquisition of Shell's New Zealand fuel retailing and distribution assets. Like Vodafone Group, Shell was ditching non-core assets to cut debt. Rebranded as Z Energy by its NZ-centric management team, Infratil reinvested capital in the fuel firm’s infrastructure and went on to stage a successful IPO in 2013.
Indeed, the market value implied by the share sale meant that the company was now worth more than four times what Infratil (and its co-investor, the New Zealand Superannuation Fund) paid for it in 2010.
Vodafone Hutchison Australia/TPG Telecom Merger
Deal Value: Implied enterprise value of $11 billion (AUD15 billion)
Buyer: New shareholding: VHA shareholders (50.1%) and TPG shareholders (49.9%)
Seller: N/A
Sale Date: July 2020
The largest deal in recent years is arguably the July 2020 mega-merger between Vodafone Hutchison Australia (VHA) and TPG Telecom. TPG sought to establish a new, fully-integrated telecom provider capable of challenging Telstra and Optus, Australia’s dominant players.
The long-running merger started in August 2018 but took almost two years to conclude. A legal challenge from the Australian Competition and Consumer Commission—which expressed competition concerns regarding the tie-up—slowed the proceedings.
With the merger endorsed by the Federal Court in February 2020, the deal finally came to fruition that summer.
The agreed merger ratio implied an enterprise value of $5.5 billion for VHA, with the enlarged company having an estimated pro forma enterprise value of AUD15.0 billion.
The agreed merger ratio implied an enterprise value of $5.5 billion (AUD7.5 billion) for VHA, with the enlarged company having an estimated pro forma enterprise value of AUD15.0 billion. Post-merger, the combined business is known as TPG Telecom Limited, but trades under the Vodafone Australia banner.
The largest shareholders are former VHA owners Vodafone Group and Hutchison Telecommunications (Australia) Limited (HTAL), each of which holds a 25.05% stake in the new business. (Note: HTAL is majority owned [87.9%] by Hong Kong-based CK Hutchison.)
Meanwhile, David Teoh, founder of TPG Internet, assumed a 17.12% stake post-merger.
Interestingly, both companies have M&A entrenched in their DNA.
Vodafone Hutchison Australia was created in 2009, following the merger of Vodafone Australia and Hutchison 3G Australia (H3G).
For its part, TPG started out as Total Peripherals Group, which was established in 1986 by Malaysian-born Australian businessman David Teoh. The company grew its business significantly with a series of takeovers, including deals for the likes of AAPT (AUD450 million, 2014) and iiNet (AUD1.4 billion, 2015).
TPG Telecom Limited currently operates under a number of brands, including: Vodafone, TPG, iiNet, Internode, Lebara, AAPT, and Felix.
amaysim
Deal Value: $175.7 million (AUD250 million)
Buyer: Optus
Seller: Distributed ownership; amaysim traded on the Australian Securities Exchange (ASX)
Sale Date: February 1, 2021
In November 2020, Australian mobile network operator Optus agreed to acquire amaysim in a deal worth $175.7 million (AUD250 million).
Amaysim—Australia’s largest MVNO by subscribers—launched over the Optus network a full 10 years earlier and grew its user base to over 1 million by the time of the transaction.
The MVNO’s wholesale agreement with Optus was due to expire in June 2022. Speculation was rife that Optus was considering an outright takeover of the company.
That said, the deal closed on February 1, 2021.
Previously, amaysim had been on the other side of the M&A coin, snapping up a succession of smaller MVNO rivals. This includes the likes of Vaya (January 2016), Jeenee Communications (December 2019), and OVO Mobile (June 2020).
Previously, amaysim had been on the other side of the M&A coin, snapping up a succession of smaller MVNO rivals. This includes the likes of Vaya (January 2016), Jeenee Communications (December 2019), and OVO Mobile (June 2020).
The MVNO even flirted with the energy sector, acquiring Click Energy for AUD120.0 million in October 2017. The business was ultimately considered surplus to requirements and amaysim offloaded its Click Energy business to AGL Energy for AUD115.0 million on August 31, 2020.
Vocus Group
Buyer: Macquarie Infrastructure and Real Assets (MIRA) and Aware Super
Seller: Distributed ownership; Vocus Group trades on the Australian Securities Exchange (ASX)
Sale Date: TBC; deal agreed in March 2021
Deal Value: $2.7 billion (AUD3.5 billion)
In March 2021, Australia’s Vocus Group agreed to a $2.7 billion (AUD3.5 billion) takeover from a consortium comprising MIRA and pension fund Aware Super.
The announcement came just one month after MIRA first approached Vocus with an indicative and non-binding proposal. Aware Super joined the consortium a few weeks later. Vocus’ board unanimously recommended that shareholders vote in favor of the acquisition unless a superior offer is made.
A shareholder meeting is scheduled for June and the transaction is expected to close by July.
The current version of Vocus was formed in 2016, following the AUD2.3 billion merger between Vocus Communications and M2 Group. The deal was agreed in September 2015 and completed in February 2016. The merged company became the fourth-largest integrated telco in Australia and the third-largest in New Zealand.
Vocus went on to acquire Nextgen Networks for AUD829.8 million in October 2016.
Today, Vocus owns and operates a 21,000 km fiber network in Australia and owns a further 4,200 km of fiber in New Zealand, as well as operating the 4,600 km Australia Singapore Cable.
In Australia, Vocus targets the B2C sector with its Dodo and iPrimus brands, while Commander serves small and medium businesses. In New Zealand, the group operates via the Slingshot, Orcon, and Flip brands.
Future Deals
Going forward, the long-term future of Vocus New Zealand remains unresolved.
In November 2020, Vocus Group appointed Goldman Sachs, Jarden, and Craigs to execute an IPO of Vocus NZ, which it expected to take place before June 2021. The Macquarie deal prompted a change of plans, however. Vocus executives suggested that it was inappropriate to pursue the IPO plans amid a takeover; the ultimate decision would rest with the new owners.
If the IPO fails to come to fruition, a sale may well be back on the agenda.
Back in 2018—in an asset auction held by Goldman Sachs and Credit Suisse—private equity giant TPG Capital, local mobile player 2degrees, and utility-provider-turned-ISP Trustpower were all said to be in the running for Vocus NZ, which was at that time valued at upwards of $390 million (AUD500 million). The sale was formally called off in April 2018.
Vocus NZ was founded in late 2014, when Vocus Group acquired New Zealand-based FX Networks.
Tom Leins
Tom Leins is a Senior Research Analyst for TeleGeography’s GlobalComms Database. Based out of the company’s UK office, he also contributes to the company’s daily CommsUpdate newsletter, which includes his popular weekly MVNO Monday round-up. MVNO industry aside, Tom has developed a strong specialization in the U.S., Latin America, and the Caribbean, tracking mergers and acquisitions, spectrum auctions, regulatory developments, market opportunities, and growth trends.