Vodafone, CK mull merger

Vodafone and CK Hutchison are considering combining their unprofitable mobile phone business in Australia with broadband provider TPG Telecom as intensifying competition forces rivals to consolidate.

Vodafone Hutchison Australia and TPG Telecom are in “exploratory” discussions, they said in separate statements yesterday.

TPG, which had a market value yesterday of A$5.84 billion (R61.7 billion), described it as a “merger of equals.”

TPG, after starting to build a domestic mobile phone network of its own, soared in Sydney trading as investors bet a union with Vodafone Hutchison would be a less costly alternative.

Former phone monopoly Telstra Corp jumped on optimism the tie-up being discussed would avert a fresh price war with TPG.

“In the end, business sense has prevailed,” Paul Budde, an independent telecommunications consultant based north of Sydney, said in an email.

“It is a win-win situation for both companies,” he said, referring to TPG and Vodafone Hutchison.

As competition intensified and handset costs rose, Vodafone Hutchison’s loss widened to A$92.3 million in the six months ended June from A$81.5 million a year earlier, according to Hutchison Telecommunications (Australia) filings.