Infratil buys Vodafone for $3.4 billion
Vodafone Group has sold Vodafone New Zealand to Infratil and Brookfield Asset Management. For now the deal is conditional. Approval is needed from both the Overseas Investment Office and the Commerce Commission before the transaction can complete.
Should the deal complete, the New Zealand operation will enter a multi-year partner market agreement with the UK-based Vodafone Group.
The deal means the local business can keep the Vodafone name and branding. It also gives the local company a preferential roaming arrangement overseas and access to Vodafone functions including central procurement and various services.
Vodafone's biggest partner
Vodafone New Zealand Chief Executive, Jason Paris says Vodafone has 40 partner agreements worldwide, New Zealand will be the biggest.
The deal is worth $3.4 billion. Infratil and Brookfield will each make a $1 billion equity contribution. The rest will be funded from Vodafone NZ level debt and equity reserved for Vodafone NZ's senior executives.
The parties have eight months to get Overseas Investment Office and Commerce Commission permissions. Infratil says there's a strong case for the Commerce Commission to give permission because of the competitive nature of the fixed broadband market.
Trustpower needs resolving
A complication is Infratil's Trustpower stake. The electricity retailer has around a five percent share of the broadband market, while Vodafone is the second largest service provider with a 26 percent market share.
If the Commerce Commission doesn't clear the deal, Infratil either has to pull away from Vodafone or divest its stake in Trustpower before the eight-month deadline.
Vodafone is New Zealand's second largest telco behind Spark. In the last year it had revenue of $2 billion and an EBITDA of $463. That puts the price at a little over 7 times earnings. While that is at the high end of the range for a telecommunications business, there were other bidders circling the business.
Cost cutting done
Until now Vodafone had been preparing for an IPO on the NZX. As part of its preparations it has been on a cost-cutting programme. It has also been held on a financial tight leash by the parent company, that has made it hard for it to compete with Spark as companies prepare for 5G mobile.
The parent company also restrained Vodafone NZ from pushing fixed wireless or from offering unlimited phone plans. Both are now expected to change.
Everyone except Vocus ticks Commerce Commission mobile review
Most telcos and all three mobile network operators welcomed the Commerce Commission's preliminary mobile review. Vocus begs to differ. The Australian telco local CEO Mark Callander described the review as 'disgraceful'.
The Commerce Commission notes there are only three mobile virtual network operators at present: Vocus, Warehouse Mobile and Compass. They have 69,000 connections. That's about one percent of the 6.4 million total.
Yet it says with companies such as Trustpower, Kogan and MyRepublic planning to enter the market there isn't enough evidence of market failure to justify further regulation of the mobile sector.
Positive trends
The Commerce Commission says its preliminary findings suggest "pricing, coverage and choice of mobile services" were trending in a positive direction for consumers.
Vocus is the largest MVNO. In a media statement the company says it is staggered that the Commerce Commission considers the wholesale mobile market as healthy.
Callander goes on to say: "...internationally consumers are well served by MVNOs providers, which drive innovation, new products and competition. He compared this to the NZ broadband market, where there are more than 80 ISPs doing great things."
Big three NZ ISPs join global tech giants, governments to sign Christchurch call pledge
Spark, Vodafone and 2degrees joined the likes of Amazon, Google and Microsoft to sign the Christchurch Call action plan that aims to stop the spread of online terrorist material.
The multinational companies signed the pledge at a meeting in Paris hosted by Prime Minister Jacinda Arden and President Emmanuel Macron. A total of 18 governments, including New Zealand and France have signed, but the US has not.
Among other things the pledge means placing checks on live-streaming and investing in technologies to detect and remove extremist material.
Visionstream, Downer sign Chorus maintenance contracts
Chorus has signed new network maintenance contracts with Visionstream and Downer worth $450 million. The agreements include work on copper and fibre networks as well as any new fibre build beyond the UFB areas. Visionstream's contract covers Auckland and north of the city, Downer is responsible for the rest of New Zealand. The agreements run for three years.
Trustpower buys Hawaiki capacity
Trustpower is the latest customer for Hawaiki's submarine cable network. The 67 Tbps cable links New Zealand and Australia to the West Coast of the USA. Trustpower says it will extend its network to the US and install a point of presence in Hillsboro, Oregon.
Chorus expands colocation services
Chorus says it has expanded its EdgeCentre Colocation service to three sites with more to follow. The first site began operation at Mt Eden in 2016. This week saw an Avonhead, Christchurch site open. Wellington will be added in June. Chorus has also added automation in the shape of Nlyte Data Centre Infrastructure Management (DCIM).
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