Home | Sign up for newsletters!

About

Advanced Search

Mobile & Wireless

Vodafone bulks up its Australian presence

Merger with Hutchinson "3" changes the country's telecom landscape to 3 significant players

      

Australia’s third and fourth ranking mobile carriers, Vodafone Australia Ltd and Hutchinson 3G Australia Pty Ltd, have formed a joint venture to rationalize resources and operations as well as to strengthen their competitive position in the country.


The two Australian units of global telcos, Vodafone Group and Hutchinson Telecommunications, are setting up a 50-50 joint venture named VHA Pty Ltd. The new company will start with a customer base of six million subscribers and a turnover of A$4 billion (US$2.7 billion).

It is a joint venture borne out of necessity in the wake of tough economic conditions faced by Vodafone Australia and loss-making Hutchinson unit. Touching on the development, Vodafone Global’s chief executive Vittoria Calao said the transaction creates a new company with the ‘necessary scale to compete strongly’ in the mobile market.

VHA will market products and services in the country under the Vodafone brand but retains exclusive rights to use the “3” brand during the transition and thereafter. The deal is subject to regulatory and shareholders approval and is expected to be completed by mid-2009.

To account for the difference in value between the two businesses, an A$500 million (US$336 million) deferred payment will be structured as a shareholder loan from Vodafone to VHA and it takes precedence over any shareholder returns, and over the repayment of interest and principal of any other VHA indebtedness, said a statement issued on the merger. “The loan is on an arm’s length basis and is expected to be repaid or refinanced within 18 months from completion.”

With the rationalization of operations encompassing procurement, product development, IT support, networks, commercial operations and administrative expenses, the statement added that the move will lead to significant cost saving of up to A$2 (US$1.3 billion) billion. Some job cuts are likely but the extent will be made known only when details have been worked out by the new company.

Hutchison Australia’s chief executive Nigel Dews heads the new entity as CEO, while Dave Boorman, currently holding the same post at Vodafone Australia, will be chief financial officer of VHA.

With its combined resources, VHA poses a credible threat to second ranking Optus, which has 7.6 million subscribers and more than A$4 billion (US$2.7 billion) in revenues. In response to media queries, Optus’ chief executive Paul Sullivan indicated that it is well positioned to use its larger scale and greater cash flow to maintain its edge, including the bundling of mobile with fixed line and Internet access capabilities.

On the issue of Optus-Vodafone relationship, Sullivan said the two companies have ongoing joint venture for coverage in metro areas and he will have to await further details about the new entity before coming to a decision.

Surprise CEO exit puts SAP shares under pressure -- February 8, 2010

Vodafone Enterprise signs 4-year Oracle deal -- February 8, 2010

IBM begins Power server upgrade to battle HP, Sun -- February 8, 2010

China shuts down largest hacker training website -- February 8, 2010

CURRENT Group and Verizon announce joint smart grid offering -- February 4, 2010

Related articles:

Samsung aims to treble smartphone sales in 2010 -- February 4, 2010
South Korea's Samsung Electronics Co Ltd said on Thursday it aimed to treble smartphone shipments this year to more than 18 million units as the world's second-biggest cellphone maker scrambles to make a mark in the fast-growing smartphone market.

RIM device development holds promise, analyst says -- February 4, 2010
Research In Motion is showing signs of progress in developing new Blackberry devices and features, and that could pay off for the company in the coming months, a TD Newcrest analyst said on Wednesday.

Nokia cuts phone prices as market growth returns -- February 2, 2010
Nokia cut phone prices across its portfolio in late January, putting its cheapest smartphones on a collision course with mid-range phones from rivals Samsung and Sony Ericsson.

Smartphone competition to bite in 2010 after Q4 boom -- February 2, 2010
Booming demand for new, cheaper smartphones helped fuel a recovery in the overall handset market late last year, but rivalry for a piece of this lucrative business will turn fierce in 2010 as many new vendors enter the market.

Now Available On Demand:

Scaling IP/MPLS: A Service Provider's View
Sponsored by Cisco
View Now!

Real World Global VPLS/MPLS Implementations
Sponsored by Juniper Networks
View Now!

See All Webinars >>


Horizon House Network
Microwave Journal
Wireless & RF News


BVD Electronic Publishing
Hosting & Development

Advertisement

©2010 Telecommunications Online & Horizon House Publications®.

 
Home | NewsGlobe | Events | Contact Us | Register | About Us | Advertise

All rights reserved. Privacy Policy.

Advertisement




Let the news come to you
Sign up for newsletters!