BREAKING NEWS: Telecom and Hutchison unveil grand alliance on 3G

New companies operating in Australia and New Zealand will be established under a 'major strategic alliance' on 3G wireless between Telecom and Hong Kong-based Hutchison Telecommunications.

New companies operating in Australia and New Zealand will be established under a "major strategic alliance" on 3G wireless between Telecom and Hong Kong-based Hutchison Telecommunications.

The new alliance aims to "a significant share of the Australian mobile market" through early launch of third generation wireless services . The alliance will have access to the global resources of the

Hutchison 3G group for content, applications, technology, management expertise and branding.

Among Hutchison's existing alliances is one with the Japanese mobile giant NTT DoCoMo, with which Telecom's future in the region was originally linked. Speculation on a new alliance had been heightened since Telecom withdrew its Australian subsidiary AAPT from the country's recent radio spectrum auction.

In a statement this morning the alliance said it believed 3G wireless communications services to be introduced from late 2002 or early 2003, "will rapidly overtake conventional mobile services in both the Australian and New Zealand markets. Given the relatively low cost of 3G spectrum licences in Australia and New Zealand,

both markets represent attractive opportunities.

"Hutchison's global scale, partner alignments, and product development and procurement synergies will ensure a competitive cost structure for the alliance while allowing it to be first to market with globally competitive products and services."

According to the statement, key features of the alliance in Australia are:

- The formation of a dedicated 3G company, Hutchison 3G Australia

(Hutchison 3G), to develop 3G services in Australia.

- $A1 billion of new equity will be invested in Hutchison 3G.

- TCNZ will subscribe $A250 million for a 19.9% stake.

- $A750 million of additional equity funding has been committed ñ $600 million to come from Hutchison Telecommunications Australia and/or Hutchisopn Whampoa and $A150 million from Telecom.

- Hutchison 3G's further funding requirements will be sourced from bank and capital markets. During the project rollout, TCNZ will not be called upon for further project equity and will not be diluted if additional funding calls are made.

- Hutchison 3G will own the 1800 MHz spectrum licence contributed by Hutchison Telecommunications Australia and the 2.1 GHz spectrum licences.

- Hutchison 3G will have the right to HWL's 3G content, products and technologies and will use the global HWL 3G brand

- Hutchison 3G is committed to an early launch of its networks and a first to market strategy for its products and services. HTAL is subject to financial incentives to support this commitment

- Both alliance partners are committed to long term investment in

Australia. Hutchison is committed to maintaining its control of Hutchison 3G until at least 36 months following commercial launch of its network.

Key features of the alliance in New Zealand are:

- Telecom is to form a dedicated 3G company, Telecom 3G (Telecom 3G) to conduct 3G business in New Zealand

- Hutchison Whampoa has entered into an option to acquire 19.9% of Telecom 3G for NZ$250 million exercisable 12 to 24 months after commercial launch of 3G services in New Zealand

- Telecom 3G has entered into agreements with Hutchison Whampoa to operate under a global 3G brand and to have access to the content, products and technologies developed and offered globally by Hutchison Whampoa's 3G businesses

- Telecom retains flexibility with respect to the timing of a 3G rollout in New Zealand

- Applications and content developed by HWL will become available to Telecom for use on its 1XRTT network

The formation of the alliance is subject to various approvals including Hutchison Australia's minority shareholder approval for the Australian transaction and FIRB not opposing the agreements.

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More about AAPTAAPTDoCoMoHutchisonHutchison 3GHutchison 3GHutchison Telecommunications (Aust)Hutchison WhampoaNTT AustraliaNTT DoCoMo

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