Hutchison and Vodafone to merge Australian operations

Stuart Corner
Monday, 09 February 2009 23:55

IT Industry - Market

Warren Chaisatien, Telsyte's research director, said: "Telsyte sees this merger as a 'marriage of mutual interest' - a positive move for both companies as it gives them a chance to become a 'credible number three', rather than a trailing number three and number four, as has been the case since their inceptions.

Chaisatien suggested that the merged entity would need to embrace fixed services in order to compete with Telstra and Optus. "The merger will undoubtedly continue to enjoy unsurpassed brand awareness and innovation in the consumer market. Nonetheless, various critical issues remain unaddressed, including how the combined entity plans to attack the more lucrative business market and how it will embrace a future fixed line strategy to compete with full-service rivals Telstra and Optus."

Burley said: "We believe this deal is neither primarily a casualty of the global financial crisis, nor the beginning of a 3G exit strategy for Hutchison, although it may raise prospects of more deals between the carriers. Rather this unique coming together of the third and fourth placed mobile operators in Australia will create a player with enough scale to sustainably compete in the Australian market.

Maurie Dobbin, managing director of consultancy, Teleresources, told iTWire that the merged entity would make important gains in spectrum, including gaining access to 850MHz across Australia which matches that used by Telstra for Next G.

"Telecom NZ [a shareholder in Hutchison Australia] has access to the 850MHz band in country areas and has been debating investments...Hutchison has this in the metro areas." (AAPT, now part of Telecom NZ got the country areas in the auction of the former AMPS-A band and used it for its CDMA network for a number of years.)

Dobbin added "Hutchison has 1800MHz spectrum it has never used and [by merging] they have doubled up on 2GHz spectrum." He said that the merged entity could replicate Next G if it chose, but he suggested the merger was aimed more at countering Optus. "Telstra's strategy is different and will unfold as the NBN rolls out. Next G will be the alternative NBN...It would be much more expensive for Telstra's competitors to match Telstra's very extensive backhaul network."

He added: "I think they will aim to be more competitive with Optus than with Telstra. The name of the game here is access to spectrum. This will be key, particular as we move to LTE. It will be LTE that will be able to deliver the high data rates, particularly that match where the population centres are."
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