Telstra loses Hutch 3G network struggle

Telstra's attempt to appoint a person of its choice as the chairman of the "3GIS" mobile network it operates with rival Hutchison Telecom Australia was yesterday rejected by the Victorian Supreme Court.

"I am pleased, but not surprised to see the matter has been resolved in our favour," said HTA chief Nigel Dews.

"Telstra made an untenable claim to assume a greater say in the operations of 3GIS than they are entitled to. I hope that under the new management team, this kind of approach by Telstra is a thing of the past," he added.

The dispute arose following the announcement in February this year that Hutchison Australia intended to merge with Vodafone Australia, which Telstra claimed changed the operations of the 3GIS partnership that it has an equal stake in.

Telstra's case rested on a clause in the companies' initial agreement which stated that in the event of a "Change of Control" of Hutchison, Telstra could appoint its nominees as chairman of the shared network's board and the Technical Committee of 3GIS — the company that Telstra in 2004 had paid $450 million for a 50 per cent stake in.

On 20 March 2009 Telstra moved to appoint Stuart Lee in place of Hutchison's nominee Michael Young, which would have given Lee the right to cast votes at board meetings. However, yesterday the court ruled Telstra's nomination invalid, that it should not be entitled to cast votes at board meetings and that Telstra pay for Hutchisons' court costs.