Australia's Vodafone and Hutchinson networks to merge

Despite being in strong competition elsewhere in the world, Vodafone and its competitor Hutchison, which operates under the Three brand in Australia, have today announced that they will be merging telecommunications operations in the Australian market.

The resulting entity will be known as VHA and will market itself under the Vodafone brand. VHA will be a 50/50 joint venture between the two parent companies, though Vodafone will receive a deferred payment of AU$500 million from VHA, which is said to compensate for the value difference between the two Australian mobile networks. On top of this, Vodafone will receive an additional brand licensing fee equivalent to 1% of service revenues from VHA.

The transaction is expected to close by mid-2009, subject to Hutchison shareholder approval and the approval of the Foreign Investment Review Board, as well as clearance from the Australian Competition and Consumer Commission.