UBS believes the merger with Vodafone Hutchison Australia should solve a number of problems for both companies and are highly complementary.
For TPG Telecom a merger is less risky than a stand-alone mobile network roll-out and solves the NBN “earnings hole”. On the other hand, for Vodafone Australia, the merger leverages the fibre infrastructure and solves balance sheet issues.
At the current share price UBS believes the risks are balanced and retains a Neutral rating. Target is reduced to $8.00 from $8.40.
Sector: Telecommunication Services.
Target price is $8.00.Current Price is $8.32. Difference: ($0.32) – (brackets indicate current price is over target). If TPM meets the UBS target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
