Hutchison, Vodafone pledge to maintain pricing

Telecommunications giants Vodafone and Hutchison 3 will maintain current customers’ pricing plans for two years if a proposed merger of the companies goes ahead.

The promise comes just three days before the Australian Competition and Consumer Commission will announce its decision on the merger, after the watchdog published in an issues paper that the deal “raises competition concerns”.

The merged entity would be known as VHA and operate under the Vodafone brand, but would keep all existing voice and data plans even as it introduces new packages.

Nigel Dews, chief executive of 3 and proposed chief executive of VHA, said in a statement that the merged entity would still remain competitive.

“We’re happy to reassure our customers with a public commitment that if the merger proceeds as intended, no plan will be withdrawn from market for the next two years,” he said.

“VHA will be a stronger mobile operator that is better positioned to compete in the Australian telecommunications market.”

The deal may alleviate some of the ACCC’s fears, after it said in its issues paper that the deal may lead to higher costs.

The watchdog claimed that the typically low-cost Hutchison contracts would disappear with no market equivalent targeting “price-sensitive customers in metropolitan areas”.

“Hutchison has competed aggressively for market share in the national market for supply of retail mobile telecommunications services, consistently attracting a relatively high proportion of customers from the other three mobile network operators.”

“The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers,” the ACCC said.

If the merger goes ahead, the new company will have 5.9 million customers and 27.3% of the market. The “3” brand will eventually be phased out and replaced entirely by the “Vodafone” brand.

• ACCC says Hutchison and Vodafone merger could push prices higher
• Competition watchdog turns up heat on Vodafone, Hutchison merger