Parties remain in mobile talks

By RICHARD BRADDELL utilities writer

An Australian mobiles joint venture between Telecom and Hutchison remains a prospect, although a deal is far from imminent.

Talks involving the joint construction of a third-generation cellular network, begun before the sale of C&W Optus to SingTel last month, have continued. Although they have waxed and waned, a source said they might gain traction next week.

Telecom and Hutchison have substantial and complementary investments in Australian second-generation licences and infrastructure, although Telecom-owned AAPT suspended construction of its network last year after spending $A125 million.

The Business Herald understands that third-generation mobile is favoured because it would distinguish a joint venture in a market where the partners currently hold only 2 to 3 per cent share, and that is through reselling arrangements.

Between them, Hong Kong-controlled Hutchison and AAPT have about 700,000 customers, a number that would have been boosted by one million had Vodafone succeeded in gaining control of Optus.

Under a conditional agreement, Vodafone would have reduced its market share in an attempt to appease Australia's competition regulator by selling one million customers to Hutchison.

While Telecom has kept its mobile options open, the expectation that a Hutchison joint venture would go for third-generation is reinforced by the strategy pursued by Hong Kong tycoon Li Ka Shing, whose Hutchison Whampoa owns 58 per cent of Hutchison Australia.

Although Hutchison Whampoa was discouraged by the high prices paid for European radio spectrum, its Australian subsidiary shelled out $A196 million for Australian third-generation spectrum rights last month.