Vodafone and Hutchison Telecommunications have announced an agreement to merge their telecommunications businesses in Australia.

Vodafone Australia and Hutchison 3G Australia, which delivers its mobile services under the “3” brand, will have an equal ownership with a 50 per cent share each in the new company. The merger is expected to be completed by the middle of this year.

The new joint venture — to be named VHA Pty Limited — will market its products and services under the Vodafone brand, but will retain exclusive rights to use the 3 brand in Australia during the transition.

"This is an important step in the transformation of the Australian mobile industry,” said Vittorio Colao, Chief Executive of Vodafone.

"Customers can look forward to a wider portfolio of voice and data services, delivered under the Vodafone brand over a high quality network, which through ongoing investment will bring 3G coverage to around 95 per cent of the population."

Vodafone and Hutchison claim a number of transaction benefits to the joint venture, including creating a stronger mobile operator better positioned to compete in the Australian market.

"Combining with the strengths of Vodafone in Australia means that our partnership will deliver leading propositions, products and services to Australian businesses and consumers across the full range of their mobile communications needs," said Canning Fok Chairman of Hutchison Telecommunications Australia.

To equalise the value difference between the respective businesses, Vodafone will receive a deferred payment of AU$500 million from the new company VHA.

It is not yet known how the merger will affect current Vodafone and 3 Mobile customers in Australia.