Vodafone in talks with Australian regulator over Optus

Vodafone is telling Australian regulators it will transfer some customers to a competitor as part of its bid to acquire Cable & Wireless Optus.

The purchase, valued at Au$20 billion ($7.5 billion), would unite Australia's second-largest and third-largest mobile phone operators.

Vodafone, which is the world's largest wireless operator, proposes to overcome regulatory concerns by 'selling' around a million mobile customers to rival Hutchison Telecommunications, a division of Hong Kong-based Hutchison Whampoa.

Analysts have suggested that the regulatory authorities in Australia might favour other bids. David Goh, of JM Sassoon & Co, in Singapore, says: "I'm not sure whether the regulators would agree to a move like that."

The Australian Competition and Consumer Commission has voiced concerns about the bid by Vodafone, which would end up with a 52.1% share of the Australian market if it won the deal without surrendering some customers.

If the purchase goes through but Vodafone surrenders a million customers to Hutchison, it would have about 43% of the Australian market share, behind Telestra with 47% and Hutchison with about 10%.

C&W Optus says it has received expressions of interest from a number of companies since putting itself up for sale last November.

Optus, which has 3.4 million mobile subscribers, is 52.5% owned by Britain's Cable & Wireless.

Other potential bidders are Singapore Telecommunications and Telecom Corp, of New Zealand.

Some analysts believe that SingTel is the front-runner because it would need to clear fewer regulatory hurdles.