STOCK exchange-listed communications firm SP Telemedia, which trades under the Soul brand, has made a $230 million bid for rival internet service provider TPG – a sign market consolidation is accelerating.

The bid, announced to the exchange by SP Telemedia yesterday, is made up of $150 million in cash and 270 million of its shares.

SP Telemedia said the combined companies would generate $607 million in the 2009 financial year. It said the combination of companies would manage one the largest DSLAM networks in the country, and is among the most profitable in terms of margins.

The company said shareholders would be asked to vote on the proposed acquisition at its annual general meeting in April. It would in the meantime commission an independent report for shareholders on the proposal.

SP Telemedia chairman Robert Millner said the acquisition would put the company in a strong position to deal with ongoing industry consolidation.

“The merger of SP Telemedia and TPG will create one of Australia's largest and most profitable telecommunications companies, with extensive owned network coverage for voice, video and data applications,” Mr Millner said.

“We believe that following the merger SP Telemedia will be strongly positioned to participate in any further industry consolidation,” he said.

TPG managing director David Teoh said the merged business will be in an enviable position to continue the strong growth.

“The extensive IP voice, video and data network of Soul and its mobile and business product capability, combined with TPG s DSLAM network and strong consumer customer presence and management, will place the business in a competitive position for the future,” Mr Teoh said.