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Vodafone, 3 to merge Australian operations

Vodafone and Hutchison Telecommunications, which delivers 3 mobile services, have announced plans to combine their Australian operations in a 50-50 joint venture
Written by Suzanne Tindal, Contributor

Vodafone and Hutchison Telecommunications, which delivers 3 mobile services, announced on Monday that they plan to merge their Australian operations in a 50-50 joint venture.

The new venture, still subject to shareholder vote to be taken by April, will be named VHA Pty Limited. The products of the venture will be marketed under the Vodafone brand and will be chaired by Vodafone's chief executive, Asia-Pacific and Middle East region Nick Read. Hutchison Australia chief executive Nigel Dews will become the venture's chief executive.

The venture would make a "stronger" mobile operator according to the companies, with around six million customers and combined revenues of approximately AU$4bn (£1.8bn), for the 12 months ending on 30 June, 2008.

The combined network will reach at least 95 percent of the population, 63 percent with 3G. Additional roll outs would bring the 3G coverage to 95 percent.

"Customers can look forward to a wider portfolio of voice and data services, delivered under the Vodafone brand over a high-quality network, which through ongoing investment will bring 3G coverage to around 95 percent of the population," Vodafone's chief executive Vittorio Colao said in a statement.

The companies hoped to achieve cost savings in excess of $2bn across procurement, product development, IT, network, commercial operations and administration.

Due to the difference in value between the two businesses, Vodafone would receive $500m as a deferred payment from the joint venture. It will also be paid a brand licensing fee of one percent of service revenues.

3 also has an agreement in place with Telstra to share a 2,100MHz mobile network. A spokesperson said that from 3's perspective this agreement would still go ahead.

The Hutchison Telecommunications Australia board has recommended shareholders vote in favour of the transaction, which is expected to close by the middle of this year.

This has not been the first time Hutchison and Vodafone have looked to enter into an agreement, with the two companies circling each other in 2001.

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