Telstra & Vodafone Kill Joint Venture Deal

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Telstra and Vodafone Hutchison Australia have jointly announced that their network joint venture using the 2100MHz mobile phone spectrum will end in 2012.

The joint venture was created in 2004, before the launch of the Next G network which operates on the 850MHz spectrum.
The change is not expected to impact Telstra’s earnings in FY10/11 or FY11/12. Telstra expects an annual EBITDA improvement of more than $50m per annum from FY13/14 to FY16/17 as a result of the decision. Telstra does not anticipate any asset impairment as a result of this agreement as the assets will continue to be utilised.
Telstra Chief Marketing Officer, Kate McKenzie, said there would be no change for the vast majority of Telstra mobile customers because the Next G network was not impacted.
“There is no change for customers on the Next G network and no change for customers in regional and rural Australia,” Ms McKenzie said. “The exit of the joint venture will go unnoticed by most of the customers still using the earlier network because their handsets will automatically roam to the GSM network for voice calls and SMS.”
From 2012 affected customers will be unable to use their handsets for 3G services such as video calling or Mobile Foxtel and mobile browsing speeds will slow when in metropolitan areas. Few customers on the 2100MHz network use their phones for such services, with only 158 watching Mobile Foxtel and 1500 placing video calls in recent months.
“The coverage, speeds and services available on the Telstra Next G network are far superior to the 2100MHz network so it made little sense to continue investing in the joint venture.”
“We will encourage customers using the earlier 2100MHz network to upgrade their handsets before 2012 so they can take advantage of faster data speeds, wider network coverage and mobile content available on Next G.”
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