vodafone optus joint venture

Vodafone, Optus unveil mobile joint venture
May 3, 2012
Competition in the mobile market is bringing former foes together.
Vodafone and Optus will enter a new joint venture building shared mobile sites and allowing Vodafone Hutchison Australia (VHA) customers to roam onto the Optus network.
The move comes as Vodafone continues to splurge on new infrastructure in a bid to improve the reputation of its mobile network.
About 900 base stations will be incorporated into the Vodafone network this year from the 3GIS network - an eight-year old joint venture between Telstra and Hutchison "3" which was due to end this year following 3's merger with Vodafone in 2009.
The merger of Vodafone and Hutchison in 2009 consolidated Australia's mobile network from four operators to three. Today's announcement pitches Optus and VHA networks together against Telstra, which has beaten both companies in the race to build a 4G network.
New chief executive Bill Morrow said the deal with Optus is still subject to approval from the Australian Competition and Consumer Commission. If approved, it would give Vodafone customers access to 400 Optus base stations.
The joint venture plans to build 500 new shared sites over the next four years. The pact will allow Optus to expand 3G and 4G coverage through extra mobile sites in Sydney, Melbourne, Brisbane, Adelaide, Perth, Geelong, Central Coast, Gold Coast and Canberra.
News of the deal comes just a day after Optus revealed plans to cut about 8 per cent of it staff - or 750 jobs - in coming months as it streamlines operations.
"Under the proposed extended network joint venture, which includes provision for a roaming agreement with Optus to commence in April 2013, Vodafone customers will gain access to hundreds of additional base stations in outer metropolitan and regional areas, increasing Vodafone's network coverage to reach 96 per cent of the Australian population," Mr Morrow said.
VHA has spent $1 billion on its network since 2009 and has built 1,100 new 3G sites, with an additional 400 sites expected to be added within months.
Meanwhile the chair of Hutchison Telecommunications, Barry Roberts-Thomson, said both Hutchison and Vodafone would continue to support the joint venture Vodafone Hutchison Australia (VHA) "despite what the media have reported".
"It is important to remind you, VHA has the support of both its major shareholders. This support and confidence was reiterated by our chairman, Canning Fok and the chief executive
of Vodafone Group [Vittorio Colao] in March," Mr Roberts-Thomson said at the Hutchison annual general meeting today.
Hutch loss
Hutchison shares are 88 per cent owned by Hong-Kong based Hutchison Whampoa and 10 per cent owned by Telecom New Zealand. Local Hutchison Telecom shares were trading at 4.2 cents today. Hutchison Telecommunications reported a loss of $168 million for the year ended 31 December 2011, compared with a $73.4 million profit in 2010. Hutchison's only business in Australia is a 50 per cent stake in Vodafone Hutchison Australia.
It books a 50 per cent share of VHA's profits or losses, but also makes money from interest repayments on loans to VHA.
"The decline in HTAL's profit resulted from a $12 million decrease in interest income following
the repayment of loans by VHA during 2010, and the decrease in VHA profitability resulting
from the network issues of late 2010 and the increasingly competitive mobile market."
Goldman Sachs analyst Christian Guerra noted this week that Vodafone would only have about 20 per cent of its mobile towers connected to fibre-optic cables by the end of this year. Data typically travels quicker on mobile networks when base stations are connected by fixed fibre cables.
Mr Roberts-Thompson said "VHA is also exploring backhaul opportunities with NBN Co, which would be of great benefit to VHA".
Separately, Vodafone signed a deal with Pipe Networks, owned by TPG, in 2010 to install 900 kilometers of high capacity fibre cables to VHA base stations in Queensland, NSW and Victoria.
Mr Roberts-Thomson said Vodafone hopes to improves its reputation this year by advertising network improvements after customers complained of poor service in some regions.
"During 2011, VHA's customer service metrics improved, wait times were down to normal levels and complaints halved. During 2012, new innovations are being introduced to make it even easier for customer to serve themselves and new simplified pricing plans were introduced by VHA in late February."
"However, turning around customer perception will take longer."

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