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Vodafone Swallows 3Vodafone Swallows 3

Vodafone and Hutchison's 3 merge operations Down Under

Michelle Donegan

February 9, 2009

1 Min Read
Vodafone Swallows 3

11:05 AM -- Vodafone Group plc (NYSE: VOD) and Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) announced today that they will merge their operations in Australia to create an operator with 6 million customers and combined annual revenues of about A$4 billion (US$2.7 billion). (See V'fone, 3 Merge Down Under.)

The news could start speculation about whether similar deals are in the works in Italy and the U.K. for Hutchison 3G Italy and Hutchison 3G UK Ltd. In the U.K., T-Mobile and 3 formed a joint venture in 2007 to share their HSDPA networks. (See 3 & T-Mobile Share 3G in the UK and T-Mobile to Bid for 3?)

The deal in Australia goes a lot further than 3's U.K. joint venture with T-Mobile. The two companies are creating a 50-50 joint venture that will be called VHA Pty Ltd., and all services will take on the Vodafone brand.

The companies say that the net present value of operating expense and capital expenditure synergies will be more than A$2 billion ($1.3 billion) net of integration costs. Vodafone will get a deferred payment of A$500 million ($340 million) to equalize the value differences between the two operators.

The deal also appears to fit in Vodafone CEO Vittorio Colao's new "cautious and selective" approach to M&A. The operator is looking to grow in markets where it is already present, rather than expanding its footprint into new markets. (See Vodafone Adjusts to Hard Times .)

— Michelle Donegan, European Editor, Unstrung

About the Author(s)

Michelle Donegan

Michelle Donegan is an independent technology writer who has covered the communications industry for the last 20 years on both sides of the Pond. Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications including Communications Week International, Total Telecom and, most recently, Light Reading.  

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