Brian Han: So, firstly, it is technically a sale of TPG's corporate telecom business to Vocus, which itself is owned by a private equity consortium including Macquarie. Secondly, the assets being sold, they are mostly telecom infrastructure network assets used to service big corporates and government enterprises. And the third thing to say is that the offer price is about $6.3 billion enterprise value, which equates to about 11.5 times EBITDA, which incidentally is what Vocus itself was sold to private equity back in 2021.

We definitely think TPG shares are still undervalued because the company has been under-earning for a couple of years now and that's due to a number of factors. One is obviously COVID. Secondly, there has been quite intense competition, especially in the mobile market. And thirdly, there has been a lot of distractions from that merger with Vodafone two or three years ago. But we think that those headwinds are all reversing.

Firstly, pricing is going up in the mobile telecom space. Secondly, the damage from COVID, they are dissipating with improvement or recovery in immigration and also roaming. And thirdly, those synergies from that Vodafone merger and also recent restructuring, they are starting to come through. But most importantly though, if we assume that this sale to Vocus of TPG's enterprise assets are done, what current price indicates is that the remaining mobile and the consumer broadband businesses, they are being valued at just seven times EBITDA, and we think that is too low considering the recovery in earnings potential that's coming through, especially as we move into 5G.

We think there is no guarantee that this deal will be done because apart from the fact that the parties can walk away after due diligence, which will be completed in early September, the most important impediment is the ACCC. And when it comes to ACCC approving these kinds of deals, it's really a crapshoot, as we found out with the recent rejection of the Telstra TPG regional network sharing deal and also, most recently with the ANZ Bank and Suncorp merger knockback. So, there are those regulatory impediments to consider, even if the parties come to an agreement after due diligence.

I think if the merger is successful, there will be some impact in Telstra in terms of having to do with a more formidable competitor in that whole corporate telecom space, because you will now have a combined Vocus TPG that's got much bigger scale in terms of infrastructure assets. And they can really go after Telstra's corporate customers. And what's more important is that they don't have to worry about protecting the margins of their legacy businesses, unlike Telstra. And also, being owned by private equity, you just don't know what kind of competitive behavior they will engage in with a much bigger scaled up company in the corporate telecom space. So, that itself presents a bit of an uncertainty for Telstra during the transitional phase.