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Mercury NZ rising in retail broadband, mobile

Mercury NZ told the NZX its NZ$467 acquisition of Trustpower’s retail business is now unconditional.

The move sees the energy company move to become a second tier telecommunications retailer and New Zealand’s largest multiple service utilities business.

The remainder of Trustpower has been renamed as Manawa Energy and says it will focus on renewable energy.

While Trustpower was a minnow compared with Spark, Vodafone and the recently merged 2degrees-Orcon business, it was the next largest fixed-line broadband retailer with a six percent market share.

It recently added fixed-wireless broadband to its product offering.

Number four in retail telecommunications

Combined with Mercury’s customers the market share moves up to 7.8 percent. Spark is on around 40 percent, while Vodafone and 2degrees are each on roughly 20 percent. The top five account for more than 85 percent of all broadband customers.

Trustpower was a Spark mobile reseller. The company’s mobile phone business barely registers in market share terms and Mercury did not formerly have any business in this space. The deal is unlikely to move the dial unless there is significant change in the Mobile Virtual Network Operator (MVNO) sector.

Despite being small, Trustpower was influential. It pioneered the strategy of cross-selling power and telecommunications. That meant it found a way to reduce customer churn. That’s something other retail broadband service providers continue to struggle with.

Vocus followed Trustpower’s lead when it acquired power retailer Switch Utilities Ltd in 2016.

This move meant it could sell similar power-broadband bundles. The company says this has proved popular with customers. Today the business is branded as Vocus Energy although that may change after the merger between Vocus-Orcon and 2degrees.

In September the Commerce Commission wave through the acquisition saying it was satisfied the deal was “unlikely to substantially lessen competition in any New Zealand market.” The consideration is based on the two companies’ position in the electricity market. In the official statement, Telecommunications was only mentioned in passing.

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