Telstra's battle against 3 was heard again in the Victorian Supreme Court on Friday, with the bigger telco reportedly attempting to win control of the two jointly owned carriers' mobile network.
Hutchison CEO Nigel Dews
(Credit: Suzanne Tindal/ZDNet.com.au)
The court stoush began in April. A Hutchison spokesperson had said that there had been a difference in opinions over the terms and conditions of the shared network agreement, which had led the companies to seek clarification in court.
Telstra's argument on Friday, according to the Sydney Morning Herald, was that 3 forfeited control of the network when it agreed to merge with Vodafone.
According to the Herald, the companies' agreement has a clause which specifies that if there was a change of control of one of the companies, the other company could elect one of its directors as chairman of the joint venture — with a casting vote.
Telstra argued that share restrictions imposed by Vodafone on Hutchison's parent company at the time of the merger meant that there had been a change in control of Hutchision which would mean that the Telstra could seize leadership of the joint venture.
Telstra and 3 signed an agreement in 2004 to share a 2100MHz metropolitan network. Telstra paid Hutchison $450 million so that the carrier's network could become a core asset of the joint venture. The sharing agreement was set to run until the spectrum licences expired in 2017 or later.
3's CEO Nigel Dews has repeatedly stressed that Telstra and 3's agreement would remain in place despite the proposed merger with Vodafone. Dews will also be heading up the merged company, VHA. The Australian Competition and Carrier Coalition was set to make a decision this week on whether or not the merger can go ahead, but the decision has been delayed.
A 3 spokesperson told ZDNet.com.au only that the court had reserved its judgement, but declined to comment further. Telstra also declined to comment.
It sounds like a case of misuse of market power to me. The ACCC ought short-circuit the legal action by Telstra and rule that it would be a misuse of market power if Telstra were to seek to determine unilaterally how the conjointly owned assets can be used.
Telstra were happy enough to enter into the JV at the time, and they ought be constrained to play fairly until its agreed termination date. One could argue that there has been an effective change of control in Telstra since the formation date, by virtue of the T3 share offering.
And changes in a parent company does not necessarily trigger a change of ownership provision regarding a subsidiary... so if necessary, the Voda/3 merger ought keep a 'notional separation' of '3' in Australia (an accounting separation) in PRECISELY the same way that Telstra has argued to the regulators that Telstra does not need structural separation of long-lines from retail, but that an accounting split ('ideological separation' that occurs only in the mind) is sufficient. Replay that nonsense back to Telstra's lawyers in this case!