Vodafone and 3 take on the competition together.

In a move that is sparking the imagination of the world, one of the world’s most successful telecom providers, Vodafone, has teamed up with Hutchison Telecommunications, who brings 3 mobile services, in Australia.

The plan to merge the two companies together in Australia will see them reach around 95 per cent of the country and is putting a flame under the debate a little closer to home which could see the likes of Vodafone and 3 Mobile team up here in Britain.

The merger will see each company have an equal 50:50 stake and unfortunately will see jobs cut as the firms join together.

To access the 50:50 income, Hutchison’s will pay £226 million to Vodafone, bringing the companies together on more of an equal footing.

Vodafone will also be keenly accepting around a 1 per cent brand licensing fee from the new business.

3UK will surely be wanting the same deal…

3UK has been suffering since its creation around 6 years ago. The company, advertised as the country’s first 3G network provider failed to gain the necessary client base it needed to take on the big providers like O2, Orange and Vodafone.

Since then a further £10 billion has been poured into the company which is still said to be running at a loss. The company is struggling to maintain its grip on its dwindling 5 million customer pool and a merger with Vodafone would be just what the doctor ordered.

VHA Pty Ltd.

In Australia, the mergered company will come under the title of VHA Pty Ltd and will see Nigel Dews, the current CEO of 3 become CEO of VHA. VHA will also place Nick Read, Vodafone’s Asia-Pacific and Middle East CEO, in the position of chairman of the company.

Read is claiming that the move has not come from concerns about the current state of the economy, but instead through a wish to tackle the competition in the country, being from Optus and Telstra.

“Customers can look forward to a wider portfolio of voice and data services, delivered under the Vodafone brand over a high-quality network, which through ongoing investment will bring 3G coverage to around 95 percent of the population,” announced Vodafone’s chief executive Vittorio Colao.

This move does not come as a surprise however, as the two companies tried a similar merger in 2001. This current merger is expected to be completed by mid 2009.

The game just got interesting in Australia.

Vodafone Australia and Hutchison 3 were taking third and fourth place in the telecom charts in Australia and the move will see a disruption brought to the market in terms of new challenges to the competition.

VHA claims that costs will be cut of worth around £906 million, although this is expected to effect employment within the company.