Hutchinson Whampoa, the parent company of 3, and Vodafone, have announced that they will combine their business in Australia to compete more effectively with rivals Optus and Telstra which have grown up to become major threats to the 3 and Vodafone.
The new company, which will adopt the name VHA, will have 6 million customers and a combined revenue of Aus$4 billion per year, roughly what competitor Optus brings in and will be jointly owned by Voda and 3.
The new entity will own 26 percent of the Australian mobile phone market, just behind Optus (30 percent) but far behind Telstra which has 40 percent of the market; no details have been provided as to whether there will be job losses.
Obviously, the immediate thought that pops to mind is whether 3 and Vodafone could possibly join forces in the UK, something that Vodafone, that has been through some tough times lately, has been considering before.
It is not the first time that Vodafone and Hutchinson Whampoa have been doing business before in India where Vodafone acquired the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion back in February 2007.
T-Mobile and Three already have a joint venture called Mobile Broadband Network limited, launched back in December 2007 and only last month, rumours claimed that BT was considering signing a strategic venture with T-Mobile and Three.
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Unlike Australia, no single mobile network operator owns more than 30 percent of the market which could be why such a merger could be out of the question for now. Furthermore, Three has already signed agreements with T-Mobile which means that a merger with Vodafone, especially in a competitive market like UK (and during uncertain times), is perhaps further than many think.