Dan Warne09 February 2009, 11:40 AM
Vodafone and 3 have announced they will merge in Australia, forming a mobile telco that can better take on Optus and Telstra. But will competition suffer?
Vodafone and 3 will have 50% ownership of the joint venture company, which will be called VHA. The 3 brand will disappear under the agreement, with all products and services being marketed under the Vodafone name (though VHA will retain the rights to use the 3 brand.)
Vodafone Chief Executive, Vittorio Colao, said: "This transaction will benefit customers in Australia as it creates a company with the necessary scale to compete strongly in the mobile market. 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% of the population. This is an important step in the transformation of the Australian mobile industry.”
The joint company will have about 6 million customers and will have a combined mobile nework with "at least 95%" population coverage, of which 63% will have access to high speed 3G services. Upon completion of additional network roll outs, VHA’s 3G population coverage is planned to increase to 95%.
However, the merger will be subject to approval by the Australian Competition and Consumer Commission (ACCC), which will be looking closely at the effects of reducing the number of mobile telcos from four to three in Australia.
Australia has seen fierce price competition in mobile telephony in the past decade, due to the unusual situation of having four entirely separate mobile networks (and many virtual network operators) competing for business.
A reduction from four networks to three could see fierce competition slowly become "a comfortable triopoly".