Its share price surged more than 11 percent in morning trade to Aus$8.77 on the news.
Ben McIntosh, Vodafone's chief commercial officer, said in a statement sent to CNET that the merger "will create even more opportunities for us as a combined entity to drive value for Australian customers".
Vodafone Australia - a joint venture between Hong Kong's Hutchison Whampoa and British parent Vodafone Group - is the third-largest mobile player in Australia, with six million subscribers.
Before the merger proceeds it will have to face reviews by the Australian Competition and Consumer Commission as well as the Foreign Investment Review Board.
TPG Telecom will have an enterprise value of A$15.0 billion, revenue of over A$6.0 billion, EBITDA of over A$1.8 billion and OpFCF of A$0.9 billion.
TPG is also in the process of building a mobile phone network, but with the Vodafone network poised to join TPG's business, analysts are asking does the merged company need this new network?
So at this point, it remains to be seen if they keep the Vodafone and TPG mobile brands completely separate and if TPG will continue to offer the hugely cheap mobile deals it was promising to bring to market later this year.
Now trading at 169.08p, down 2.23 per cent as of BST 11.12, Vodafone PLC (LON:VOD), like many other companies on the Index, is struggling to gain momentum as GBP strength soars. The merged company will be a more powerful challenger to Telstra and Optus in Australia, with an integrated fixed and mobile offering.
TPG is now Australia's third largest telco provider, while Vodafone Hutchinson Australia sits in fourth place. There are no changes now planned to any of the existing brands of either VHA or TPG.
TPG will hold the rest of TPG Telecom Limited, which will be recorded on the Australian Securities Exchange.
VHA chief executive Inaki Berroeta said the merged companies would provide scale and financial strength to compete more effectively with the likes of Telstra.
Major shareholders of Vodafone Australia and TPG, including Mr Teoh, have entered a 24-month voluntary escrow arrangement as a show of their commitment to the merger.