Telecom unveils Aussie mobile plans

By Phil Boeyen, ShareChat Business News Editor

Friday 11th May 2001

After months of speculation about Telecom's (NZSE: TEL) mobile direction in Australia the company has revealed plans for a strategic alliance with Hutchison.

The alliance, between Telecom, Hong Kong-based Hutchison Whampoa and Australia's Hutchison Telecommunications, will take the form of two new companies in Australia and New Zealand which will focus on third generation (3G) products and services.

"The alliance aims to take a significant share of the Australian mobile market through early launch of "3rd Generation" wirefree communication services and to reinforce TCNZ's continued mobile market leadership in New Zealand," the partners said in a statement.

Under the agreement the companies will access resources of the Hutchison 3G group for content, applications, technology, management expertise and branding.

Telecom says Hutchison is a global leader in 3G, with licences covering over 170 million people worldwide and alignments with several leading communications and media players, including Japan's NTT DoCoMo.

Services are due to be introduced in both countries by the end of next year.

In Australia the new company, Hutchison 3G, will have A$1 billion of equity. Telecom will take a 19.9% stake for A$250 million with a further commitment of A$150 million.

Hutchison Telecommunications and/or Hutchison Whampoa have committed A$600 million.

In New Zealand the company will be called Telecom 3G, of which Hutchison Whampoa will take an option on 19.9% for $250 million.

Hutchison group MD, Canning Fok, says partnering with Telecom will cement the company's success in Australia and extend its reach to New Zealand.

"Telecom New Zealand represents a logical partner for us given its formidable strength in the New Zealand market and the substantial synergies which can be extracted through a Trans-Tasman presence."

Telecom CEO Theresa Gattung says the development provides relatively low-cost entry to cellular network services in Australia with a partner who has global leadership in 3G.

"With the Hutchison group we can pursue the fastest, most capital and cost efficient path to delivering 3G services in Australia and New Zealand, drawing on our joint skills and resources, which provide scale for procurement, deployment and content development.

"This gives us many cost and other advantages not available to our domestic competitors."

Hutchison had been widely rated as a potential partner for Telecom after the New Zealand telco pulled out of the auction for 3G spectrum in Australia.

It had also become obvious that Telecom did not want to proceed to develop its own mobile network in Australia after putting the rollout of AAPT's network on hold last December and then cancelling it altogether last week.

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