Telstra and Vodafone Hutchison to scrap mobile joint venture in August 2012

21 Oct 2010

The Australian Associated Press (AAP) reports that Telstra has agreed to shut down a 3G mobile spectrum joint venture with Vodafone Hutchison Australia (VHA) in 2012, a move the incumbent telco said will boost its EBITDA by AUD50 million (USD49 million) from the 2013 fiscal year onwards. Telstra and VHA today said their agreement on sharing 2100MHz band mobile frequencies – in place since 2004 – would end on 31 August 2012. Telstra chief marketing officer Kate McKenzie said it ‘made little sense to continue to invest in the joint venture’, given Telstra’s ‘Next G’ 3.5G network provided superior coverage. Telstra added that it does not anticipate any asset impairment as a result of the agreement ending, because the assets would be incorporated into the Next G network. VHA and Telstra said their customers ‘would not be immediately affected.’

TeleGeography’s GlobalComms Database notes that in August 2004 Telstra bought an equal share in the W-CDMA network of rival Hutchison 3G Australia (H3G), enabling it to launch high speed mobile services without the initial costs associated with building its own network; the network assets shared by the two operators were owned by a 50/50 joint company, 3GIS. H3G subsequently formed a 50/50 joint venture (VHA) with Vodafone Australia in June 2009.

In other Telstra news, Australian government-owned investment organisation Future Fund has sold 113.6 million shares in the telecoms group at an average price of AUD2.66 per share to reduce its stake from 10.9% to 10%. Meanwhile, as previously reported by CommsUpdate, legislation designed to force the former fixed line monopoly to structurally separate its retail and wholesale operations has been reintroduced to parliament this week, which, according to reports has contributed to the company’s shares hitting an all-time low. The stock hit a record intra-day low of AUD2.58 and closed down AUD0.02 at AUD2.63 as almost 105 million shares changed hands yesterday; Telstra shares have shed 21% since August, despite the broader market heading upwards.