Vodafone, Hutchison to Merge Australia Businesses

Global mobile phone companies Vodafone and Hutchison Whampoa will merge their Australian businesses to create a company able to take on the dominant operators, the two firms said on Monday.

The move creates a company with 6 million customers and combined annual revenue of A$4 billion (US$2.7 billion), close in scale to Australia's two dominant mobile companies, Telstra and Optus, owned by Singapore Telecommunications. 

The joint venture would operate under the Vodafone brand, and will aim to provide a range of mobile services to 95 percent of the population.

"This transaction will benefit customers in Australia as it creates a company with the necessary scale to compete strongly in the mobile market," said Vodafone chief executive Vittorio Colao.

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Telstra has annual mobile revenues of around $A5.5 billion, while Optus' revenues are more than $4 billion.

The deal involves a deferred payment to Vodafone of A$500 million to realise the difference in value between the two companies.

Vodafone has about 4.2 million customers and had earnings before interest, tax, depreciation and amortization (EBITDA) of A$499 million in the year to March 30, 2008. Hutchison had EBITDA of A$173 million in the year to June 30, 2008.

The units being merged are Vodafone Australia and Hutchison 3G Australia, a unit of Hutchison Telecommunications (Australia).

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