Stan Beer
Monday, 25 May 2009 16:19
Opinion and Analysis
Page 1 of 2
Some
market watchers say that a pricing announcement today by Vodafone and
Hutchison will not influence an ACCC determination about their proposed
merger on May 29. However, it is hard not to view the announcement
promising to maintain existing pricing for the next two years as a
pretty fair attempt.
The two mobile phone carriers in February
announced their intention to merge Australian operations, which would
create a carrier with about 6 million subscribers. The merged entity
would have the scale to rival second placed Optus which has a bit less
than 8 million subscribers and Telstra which has about 9.5 million
subscribers.
However, the stumbling block could be the Australian Competition and
Consumer Commission which is due to make a determination on the merger
this Friday 29 May.
The big issue that has been raised is whether the merger would lessen
competition in the Australian mobile phone market and thus result in
raised prices.
Both Vodafone and 3 (owned by Hutchison) are the two most aggressive
players in the Australian market when it comes to price. Both offer
attractive plans and rates in both mobile voice and data compared to
their two bigger rivals and both compete vigorously against each other
for a similar price conscious customer demographic.
Thus, there is a strong argument that the merger could significantly impact the budget priced mobile market in Australia.
It is in this context that the companies issued a joint announcement
today with a title boldly proclaiming: "Vodafone and Hutchison
committed to maintain market-leading prices"
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