Consolidation For Oz 3G

Australia will soon count just three 3G mobile operators, after the third and fourth-ranked mobile telcos, Vodafone and Hutchison Telecom’s 3, agreed to merge operations in the country.

The deal creates an operator with 33% of the mobile market in an attempt to combat the dominance of Telstra (which has 40%) and SingTel’s Optus (33%). Some 6 million mobile subscribers will contribute revenues of around A$4 billion.

The new joint venture, VHA, will be owned 50/50 with services retaining the Vodafone brand. VHA will also pay Vodafone A$500 million to equalise the value difference between the merging companies.

Hutchison’s 3 was Australia’s first 3G mobile network, launching in April 2003. In November 2008, the company hit the 2 million customer mark. Services include unlimited YouTube access as well as a mobile TV pack for A$10 a motnh. The pack includes content from E! Entertainment, MTV, SBS, Cartoon Network, CNN, Sky News 24, Fox Sports News, Animax, Nickelodeon and Nick Jr, and ABC Kids. It also offers high-profil live international cricket coverage each summer through a sponsorship/3G rights deal with Cricket Australia.

Vodafone Australia, meanwhile, is strong in the pre-paid sector, although its post-paid business has been growing. Of the company’s 3.9 million subscriber base, just under 1.2 million are receiving services on 3G devices at the end of 2008, a 49.9% increase on the same period the previous year. However, ARPU is heading southward, down 2.1% over the last year.

Vodafone Live! Offers 30 “channels” of TV, divided into three packs – the Rugby Pack, the News & Sports Pack and a Music & Entertainment Pack at A$8 each. Subscribers can take all packs for A$15 a month. Content comes from providers including Fox Sports Rugby TV, Sky News, BBC News, MTV and Nickelodeon.

It is not clear what will happen to the mobile TV offerings, but the operators are likely to want to keep their exclusive sports coverage of rugby and cricket as part of a merged service.

The deal must gain regulatory approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board as well as needing the consent of Hutchison’s shareholders.