Hutch-Vodafone merger plans stalled by regulators

02 April 2009

The proposed joint venture between Vodafone Australia and Hutchison Telecommunications has been stalled by the Australian Competition and Consumer Commission, which said the merger raised competition concerns in the short- to medium-term in the mobile telephone and mobile broadband markets.

"The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers in the retail mobile telephony and MBB services segments in the retail mobile telecommunications services market," it said in a report.

There is also a concern that existing network sharing relationships between Vodafone and Optus and Hutchison and Telstra could lead to anti-competitive coordination under the joint venture. The ACCC has called for submissions from all market participants to assist in its proper investigations. A final decision is expected on 6 May, it said.

The merger requires the approval of the ACCC and HTA shareholders, who are meeting in Sydney on Thursday to vote on the proposal. Vodafone and HTA have said they hope to have the joint venture established by mid-year.

The merger of the third and fourth largest telcos in Australia will be known as VHA Pty Ltd, with each company to own a 50-per cent stake. The unlisted Vodafone will be the lead brand in the partnership, with the future of the '3' brand, owned by the listed HTA, uncertain.

The two companies had announced last month that they would form a joint venture, giving it about six million customers and combined total revenue of about $4 billion. The joint assault on the mobile market depends on the go-ahead from the ACCC, which has received submissions from customers, rivals and retailers.