Vodafone Australia and Hutchison Telecommunications likely to merge

Vodafone Australia and Hutchison Telecommunications likely to merge

Vodafone Australia and Hutchison Telecommunications have proposed to merge and would operate under the brand name of Vodafone, VHA.  After the merger VHA’s revenue shall go up to $ 4 billion and its customers to about 6 million.

In the merger deal Hutchison is planning to pay Vodafone A$500m (£227m) but would retain exclusive rights to use the 3 brand in the country. The merger would also ensure a better competition with the market leaders Tilstra and Optus. The market share of VHA is expected to be 25 percent, Telstar 42 percent and Optus 33 percent. The saleability of the stakes of Hutchison Telecommunications is also expected to improve.
It is also speculated that with the Hong Kong based Hutchison Whampoa is giving up its mobile phone business in Australia. The company may either merge or sell its UK business where it has just about 4 million customers. Spokesman for Vodafone denied of making deal elsewhere in the world and said, “This is just about Australia, it has no bearing on the UK."

In UK there is likely to be a tie up. Presently net work sharing, 3 with T-Mobile and Vodafone with Orange, has been a hurdle for any tie up. T-Mobile's parent, Deutsche Telekom, is not so strong financially and is thus concentrating outside Germany that is on the US market and may go in for a joint venture in case Hutchison again is willing to compensate T-Mobile through payments, as has been done in Australia. 

John Delaney, principal analyst of IDC said, "Clearly the UK is one of the most obviously ripe for consolidation but 3 is much smaller scale than the other operators and if UK consumers start to cut back on their service spending - which they are likely to do as the majority of them are on pre-pay - 3 will come under pressure more quickly than the other operators."

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