Hutchison, Vodafone, to merge

Vodafone and Three will merge and combine their networks to bring 3G to 95% of Australians.

Australia’s third and fourth largest mobile phone companies, Vodafone and Hutchison Telecommunications, have agreed to “merge their telecommunications businesses in Australia.”

The resulting company will have around six million subscribers and will shortly bring 3G coverage to 95% of Australia’s population.

The “3” brand seems likely to be a casualty of the transaction, as the new joint entity (named “VHA”) says it will “market its products and services under the Vodafone brand, but will retain exclusive rights to use the 3 brand in Australia during a transition period and thereafter.”

The two companies hope to conclude the deal by the middle of 2009.

Details of the transaction can be found in the Vodafone press release.

TechTarget ANZ says

The decision to merge 3 and Vodafone is almost certainly driven by a mutual desire to minimise the need for the vast investments required to construct meaningful 3G networks.

Our first reaction was to assume this will be bad for competition and therefore bad for TechTarget ANZ readers. Removing one of four players, after all, seems unlikely to spark a price war.

After a little thought, however, we feel that consumers may not have a lot to fear.

3 has consistently led the market on price and dragged handset subsidies back into the market. Vodafone has innovated with caps for business. Both offer very attractively-priced wireless broadband. And both have a reputation for solid network performance which, while not matching Telstra’s Next G offering, has not suffered the spotty coverage many users complain of from Optus.

These qualities mean there is potential for the newly merged companies to re-invigorate the mobile telephony market, using their newfound scale to disrupt the big two.

We hope the new company does so: a cosy triumvirate will benefit no-one, least of all the shareholders being asked to approve this deal!

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