Mobile phone operators Vodafone Australia Ltd and Hutchison Telecommunications (Aust) Ltd have agreed to merge their businesses in Australia.
Each company will own 50 per cent of the joint venture, 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, during the transition period and thereafter.
Vodafone will receive a deferred payment of $500 million from VHA to equalise the value difference between the merging companies.
Vodafone Group chief executive Vittorio Colao said VHA would be a strong competitor in Australia's mobile market.
"This transaction will benefit customers in Australia as it creates a company with the necessary scale to compete strongly in the mobile market," Mr Colao said in a statement.
"This is an important step in the transformation of the Australian mobile industry."
Completion of the transaction is expected mid-year, subject to the approval of the Foreign Investment Review Board, clearance from the Australian Competition and Consumer Commission and the approval of Hutchison Telecommunications (Aust) shareholders.
Hutchison's board has unanimously recommended the transaction.
The merged entity will have approximately six million customers and a combined total revenue of approximately $4 billion for the year ended June 30, 2008.
VHA will have at least 95 per cent coverage of the population, 63 per cent of which will have access to 3G services, the companies said.
Earnings per share for both Vodafone and Hutchison Australia are expected to be enhanced by the deal, the companies said.
A spokeswoman for Hutchison Australia said the company would remain committed to its listing on the ASX.
VHA will be headed by current Hutchison Australia chief executive Nigel Dews, 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.
The myth of competition is becoming a reality with acquisitions of this nature.
The petrol industry in Australia is a duopoly, and the banking sector is closing in as well.
The public transport system in Melbourne / Victoria is a MONOLPOLY.
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