Australia - national roaming

Next G roaming for 3 a wholesale change for Telstra

THE threat of losing 3 Mobile as its major customer has persuaded Telstra to open its industry-leading Next G mobile network to wholesale access.

The new roaming deal for 3 customers was the highlight of the half-year results for 3's parent company, Hutchison Telecommunications, which continued its slow journey to profitability.

Hutchison's revenue increased 23.7% in the first six months of the calendar year to $760.9 million, helping the company cut its loss for the period to $85.4 million — a 56.7% improvement on the same period last year.

A crucial factor in the company's improvement was its recapitalisation last year, which entrenched the dominance of No. 1 shareholder Li Ka-shing but halved its annual debt repayment costs.

Telstra and 3 partnered to build a 2100-megahertz 3G mobile network in 2005 across metropolitan Australia, which involved 3 customers roaming on Telstra's much slower 2G network when they were outside the 3G coverage area.

While their partnership remains, Telstra chief executive Sol Trujillo ordered the company to focus its 3G expansion on its wholly owned Next G network, which operates on the 850MHz frequency rather than the 2100MHz joint-venture network.

Telstra's refusal to allow wholesale access on Next G prompted rivals Optus and Vodafone to start building their own 900MHz networks, with both keen to replace Telstra as 3's roaming partner. The potential for 3's defection persuaded Telstra not only to offer 3 customers limited access to Next G, but also to cut the roaming charges paid by 3.

Hutchison chief executive Nigel Dews said the revised deal was enough to stop 3 negotiating with Optus or Vodafone, even though it did not extend to outlying areas of the Next G network (and will be throttled at 3.6 megabits per second, according to Telstra sources).

"We don't intend to roam with anyone else domestically — we intend to stick with our partner, Telstra," he told BusinessDay.

"If you look at the other (telcos') published results and you take in to account that we only sell in 60% of the country — because we only sell in areas where we have network — we're punching well beyond our weight," Mr Dews said.

Hutchison forecast pre-tax earnings would move into positive territory by the end of the year, but only for individual monthly results and not for the entire six-month period.

Its shares closed 2¢ lower at 11¢.