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Vodafone share price climbs 7%: will the TPG merger be approved?

The Motley Fool logo The Motley Fool 3 days ago Lachlan Hall

a close up of a sign: mobile, disruption, fight, phone© Provided by The Motley Fool, Inc mobile, disruption, fight, phone The Hutchinson Telecommunications (Australia) Ltd (ASX: HTA) share price climbed as much as 20% higher yesterday despite minimal value-sensitive news. 

So, could this mean the Vodafone–TPG Telecom Ltd (ASX: TPM) merger is set for ACCC approval?

Why did the Vodafone share price move higher?

The company announced a change in Company Secretary but it’s hard to believe this was the reason for the 6.7% share price increase, let alone the $0.18 per share valuation that it reached during the day.

The company’s traded volume spiked on Friday to 543,875, a level that the stock hasn’t seen since December 2018 after the ACCC voiced concerns about the proposed merger.

That was a theme continued on Monday as the traded volume reached 269,470 which is still significant given traded volume is usually less than 50,000 shares.

I wouldn’t be surprised if this increased activity is speculative trading ahead of the ACCC’s decision on the merger which is slated for May 2019.

TPG scrapped its plans for a 5G network in late January as it blamed the Federal Government’s ban on Huawei equipment for use in the national infrastructure.

However, speculation has been rife that this was a decision made to ease the ACCC’s antitrust concerns arising from the merger between two significant telecommunications companies in Australia.

Should you buy TPG or Vodafone?

The TPG share price is up 10.7% so far this year in what has been a volatile year for investors but its $6.96 per share valuation is a long way shy of the $9.31 level reached in August 2018.

I’m not personally in the game of punting on mergers and acquisitions, but I do think there could be further growth potential in the Aussie telco sector.

I think one of Australia’s favourite blue chips Telstra Corporation Ltd (ASX: TLS) offers a solid dividend and could continue to rebound if the TPG-Vodafone merger is approved, while Vocus Group Ltd (ASX: VOC) is more of a growth option in the medium-term.

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Pictures: Mega-mergers: The biggest business tie-ups of all time (lovemoney)

The most colossal corporate couplings ever: Ever since the East India and New East India Companies merged way back in 1708, major companies have been joining forces to cut costs, diversify and increase market share. We count down the 30 most costly corporate amalgamations of all time, adjusted for inflation.

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