Vodafone and Hutchison Telecommunications, which
delivers 3 mobile services, have today announced that they will
merge their Australian operations in a 50:50 joint
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 CEO Asia-Pacific and Middle East region Nick
Read. Hutchison Australia CEO Nigel Dews will become the venture's CEO.
The venture would make a "stronger" mobile operator according
to the companies, with around 6 million customers and combined
revenues of approximately $4 billion for the 12 months ended 30
The combined network will reach at least 95 per cent of the
population, 63 per cent with 3G. Additional roll outs would bring
the 3G coverage to 95 per cent.
"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 per cent of the population," Vodafone's
chief executive Vittorio Colao said in a statement.
The companies hoped to achieve cost savings in excess of $2 billion across procurement, product development, IT, network, commercial operations and administration.
Due to the difference in value between the two businesses,
Vodafone would receive $500 million as a deferred payment from the
joint venture. It will also be paid a brand licensing fee of 1 per cent 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 that 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 that Hutchison and Vodafone
have looked to enter into an agreement, with the two companies circling
each other in 2001.