When our local ice-cream parlour closed down recently there was much disappointment within the local community. “We’ll have to buy our ice-creams from McDonald’s next door instead” many people said with a sigh. The parlour’s ice-cream was nice, but not sufficiently compelling to enough people to compete against other local vendors. The business was unprofitable and could not survive. There are lessons in this unfortunate tale for the Australian telecoms market.
We examine the current health of the Australian mobile sector and conclude that the local businesses of Vodafone and Hutchison are unsustainable over the long term. Their proposal to merge will be good for customers and shareholders alike.
(This paper was originally published on 14th May 2009)