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SYDNEY - A significant merger between two Australian telcos today has reshaped the mobile marketplace there.
Mobile phone operators Vodafone Australia Ltd and Hutchison 3G have agreed to merge their businesses across the Tasman.
Each company will own 50 per cent of the joint venture, VHA Ltd.
VHA will market its products and services under the existing Vodafone brand, and retain the exclusive rights to the 3 brand, which is owned by Hutchison.
Vodafone will receive a deferred payment of A$500 ($644) million from VHA to equalise the value difference between the merging companies.
Vodafone chief executive Vittorio Colao said VHA would be a strong competitor in Australia's mobile market.
"This transaction will benefit customers in Australia as it creates a company with the necessary scale to compete strongly in the mobile market," Mr Colao said in a statement.
"This is an important step in the transformation of the Australian mobile industry."
Completion of the transaction is expected mid-year, subject to the approval of the Foreign Investment Review Board, clearance from the Australian Competition and Consumer Commission and the approval of Hutchison Telecommunications (Aust) shareholders.
The merged entity will have approximately six million customers and a combined total revenue of approximately $4 billion for the year ended June 30, 2008.
VHA will have at least 95 per cent coverage of the population, 63 per cent of which will have access to 3G services, the companies said.
Earnings per share for both Vodafone and Hutchison Australia are expected to be enhanced by the deal, the companies said.
A spokeswoman for Hutchison Australia said the company would remain committed to its listing on the ASX.
VHA will be headed by current Hutchison Australia chief executive officer Nigel Dews, with Vodafone CEO Nick Read as chairman.
Current Vodafone Australia CEO Russell Hewitt will be a non-executive Director of VHA.
Hutchison Australia is expected to hold an extraordinary general meeting in April to enable a shareholder vote on the merger.
Hutchison says its board recommends the transaction unanimously.
- AAP
