Australia's TPG Telecom plans to buy rival operator iiNet, in a deal set to create the market's second largest fixed broadband operator after incumbent Telstra.
Subject to regulatory approval, TPG plans to buy all the shares in iiNet that it does not yet own in a deal that would value iiNet at around A$1.4 billion ($1.06 billion).
The merger would create an operator with a broadband subscriber base of over 1.7 million, putting it in a position to challenge Telstra's fixed-line dominance. Currently, iiNet is Australia's third-largest broadband operator with around 975,000 subscribers, while TPG has about 700,000.
The acquisition would also give TPG around 60,000 retail National Broadband Network (NBN) subscribers and a network of over 450 DSLAMs.
Australian competition regulator ACCC has revealed plans to launch a public probe into the terms of the deal and its potential impact on competition, and experts have speculated that rival operator Optus may submit a counter-offer. The deal also requires iiNet shareholder and court approval.
But if these obstacles are bypassed, TPG will be in a much stronger position after the merger, with an expanded national presence and significant scale benefits. TPG said it expects the merger to be immediately earnings-per-share accretive.