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3G/HSPA

Vodafone Cozies Up Down Under

Market conditions in Australia and New Zealand could force the regional subsidiaries of wireless behemoth Vodafone Group plc (NYSE: VOD) into teaming up with rival carriers for future 3G network rollout.

Vodafone Australia today admitted it is in advanced partnership talks with competitors. “We are talking to all the major telcos in Australia,” Grahame Maher, managing director, told Dow Jones Newswires. “They are well advanced. It will be some form of shared investment. Due to the sheer scale, geography, and nature of the Australian market, we feel that a partnership will be the most effective way for us to deliver 3G-based services.”

Maher added that a final decision is expected by December at the latest, with commercial 3G services live by mid-2005.

Potential partners in the Australian market include Telstra Corp., SingTel Optus, and Hutchison Telecommunications (Australia).

Meanwhile Vodafone New Zealand's decision to spend “hundreds of millions of dollars” on its 3G network within the next eighteen months has prompted market analysts to warn that the carrier will have to repeat its Australian intentions if it is to see a successful return on investment (see VOD Invests in New Zealand).

“There is clearly no business case whatsoever for the launch of competing nationwide 3G infrastructures in a country the size of New Zealand,” comments Paul Budde, managing director of Paul Budde Communication Pty Ltd. (BuddeComm). He warns the carrier could face a 3G “head-on collision course” with rival TelstraClear Ltd. if they do not cooperate on their respective network plans.

A tieup would therefore benefit both parties. TelstraClear has admitted it is eager to find a collaborative approach to its 3G rollout investment, and plans to use the same technology of choice as Vodafone -- Wideband Code Division Multiple Access (W-CDMA). The country’s incumbent carrier -- Telecom New Zealand Ltd. -- operates on an incompatible CDMA2000 1X network.

Both Vodafone subsidiaries are now in the process of joint vendor selection for their W-CDMA network rollouts. In light of LM Ericsson's (Nasdaq: ERICY) history as an established supplier to the carrier, the market-leading Swedish player seems a likely winner.

Vodafone’s plans follow recent European approval for 3G network sharing, a move expected to save mmO2 plc and T-Mobile International AG billions of dollars in infrastructure costs (see EC: T-Mobile, MMO2 May Share).

— Justin Springham, Senior Editor, Europe, Unstrung

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