Connected Research

Union policy research in the 21st century

Vodafone and 3 merge in Australia

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Vodafone and Hong Kong-owned 3 have closed the merger of their Australian interests, following the approval of the Australian regulatory authorities at the end of May, according to a very brief statement published on the Vodafone Group website today.

According to a rather fuller press release from Vodafone Australia issued after regulatory approval, the merger vehicle would be a 50:50 joint owned venture called Vodafone Hutchison Australia.

For those watching the UK mobile market and the potential for some consolidation between the operators, there are some interesting indicators arising from the merger. (Inevitably, telecoms in the UK and Australia are overseen by different regulatory structures albeit that these are, in turn, governed by similar market-based liberal perspectives.)

Firstly, Vodafone has around 4m customers in Australia while 3 has 2m. The combined market share under the control of the joint venture is likely to be 25-27% of the total. Telstra has 45% of the market while Optus, the other large operator which shares a network with Vodafone, has the balance.

Secondly, the Australian regulatory authorities concluded that not only was the deal was unlikely to have a substantial impact on competition; long-term competition between the two was not sustainable. Futhermore, without the merger, Vodafone and 3 would be unlikely to sustain significant investment in their mobile networks at all.

In other words, the authorities have concluded that two relatively small operators in the market have no future and that long-term competition in the market, and the investment required in the future, is best served by having a lower number of operators with greater scale and resources. This provides an interesting comment on the abilities of regulation in a market place characterised by operators of fundamentally different sizes.

None of this reasoning would seem to apply to the mobile market in the UK where the operators other than 3 have an even share of the market.

The joint venture will continue to market products and services under the separate parent brands for the foreseeable future, while approaches to handsets and mobile pricing will remain in place for two years, but is expected to market services under the Vodafone name in the future.


Written by Calvin

10/06/2009 at 2:03 pm

Posted in Telecoms companies

Tagged with , ,

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