A merger of Vodafone Australia Ltd and Hutchison Telecommunications (Aust) Ltd will result in redundancies.
The merger, announced on Monday, will see each company take a 50 per cent stake in a venture to be named VHA Pty 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.
The merger still needs to approval of Hutchison Australia shareholders and the Australian Competition and Consumer Commission (ACCC), but the transaction is expected to be completed by mid-2009.
Hutchison Australian chief executive Nigel Dews said during a teleconference the merger will result in redundancies, but did not say how many jobs would be cut.
"There will be redundancies, and we'll be dealing with those as we get our plans more fully into place," Mr Dews said.
"There's synergies across all areas, but the vast majority of those would be in overhead areas as distinct from the front line."
The two companies combined have a total of approximately 3,700 jobs, the majority with Vodafone, the companies said.
They also own a combined total of over 400 retail outlets.
Mr Dews said the number of store closures would be a matter for future planning.
"In the end it's a matter for the detailed planning that we'll undertake in the next few months to work that out precisely."
Current customers of Vodafone and 3 will not be adversely affected by the merger, Mr Dews said.
"Nothing changes for existing customers of 3, existing contracts and arrangements remain in place," he said.
"What this transaction enables us to do through gaining greater economies of scale is provide lower prices to consumers for longer periods of time.
"In the short-term nothing changes ... customers should not be worried at all."
VHA will have approximately six million customers and a combined total annual revenue of approximately $4 billion.
Earnings per share for both Vodafone and Hutchison Australia are expected to be enhanced by the deal, the companies said.
VHA will have at least 95 per cent coverage of the population, 63 per cent of which will have access to 3G services, they said.
Representatives from both parties said the merger was not a response to the current economic climate, and instead a move to better compete with market dominators Telstra and Optus.
"I really don't think the economic climate is relevant to this proposal," Mr Dews said.
"It's all about scale. We needed to have the appropriate scale to compete against both of those players.
"It was more about the opportunity of really making a difference to the Australian market and the consumers."
Merger negotiations between the two companies "got serious over the last couple of months", Mr Dews said.
Mr Dews will be the chief executive of VHA, while Vodafone CEO Russell Hewitt will be a non-executive director.
Vodafone's CEO of Asia-Pacific and Middle East Nick Read will be VHA's chairman, and current Vodafone chief financial officer Dave Boorman will be VHA's CFO.
Hutchison Australia is expected to hold an extraordinary general meeting in April to enable a shareholder vote on the merger.
Front page
RSS Feed