Makes UK-based mobile operator a tough competitor to fixed line market megalith, Telecom New Zealand
Vodafone Group has announced that Vodafone New Zealand has entered into an agreement to acquire TelstraClear, the New Zealand business of Telstra Corporation, for a cash consideration of NZ$840 million (£430 million).
Vodafone New Zealand is the country's largest mobile operator with more than 2.4 million customers. TelstraClear is the second largest fixed operator in New Zealand with extensive fixed network assets and capabilities. Its customer base includes government and large corporations, small and medium enterprises as well as consumers.
The acquisition of TelstraClear will strengthen Vodafone New Zealand's portfolio of fixed communications solutions and create a leading total communications company.
Tony Brown, senior analyst at Informa Telecoms & Media, commented on the announcement: 'This is another clear demonstration of the importance that the UK-based operator is now placing on gaining access to fixed broadband networks wherever it is possible to do so in order to offer a fixed and mobile full service offering to subscribers.
'The acquisition of Telstra Clear follows a line of similar moves by Vodafone in other countries and – if approved by the New Zealand Commerce Commission (NZCC) – will make Vodafone an even tougher opponent for fixed line market giant, Telecom New Zealand.
'Importantly, the acquisition of Telstra Clear will also give Vodafone an important leg-up in the country's lucrative enterprise segment which is currently dominated by Telecom New Zealand, with Vodafone left largely on the sidelines. In the broader New Zealand market, an approval of the deal by the NZCC would make life tougher for stand-alone mobile player Two Degrees, which would be up against two full-service operators both with huge financial backing,' said Brown.
TelstraClear owns the country's second largest fixed infrastructure, which includes a 6,600 kilometre fibre backbone connecting 19 of the country's largest cities. It also includes an extensive local access network with 2,000 kilometre of fibre and 4,500 kilometre of copper as well as a cable TV and broadband access network passing 150,000 homes in Wellington and Christchurch.
The combined business will be ideally positioned to capture the benefits of the structural changes underway in the New Zealand market. This includes the rollout of a wholesale fibre access network to 75% of New Zealanders by 2019 under the government's Ultra-Fast Broadband Initiative, which will allow Vodafone New Zealand to purchase last mile wholesale access outside of TelstraClear's existing footprint on equal terms with Telecom New Zealand.
The transaction is expected to create significant cost and CAPEX savings from a combination of the two companies' networks, commercial operations and HeatherMcLeanistrative functions.
Brown added: 'For Australian giant Telstra, the deal represents an exit from the New Zealand market in which it has failed to make the impression it had hoped to, largely because of its inability to gain access to the mobile infrastructure market.'
Subject to approval from the NZCC, the Ministry of Business, Innovation and Employment and the Overseas Investment Office, the transaction is expected to complete in the fourth calendar quarter of 2012.
Vittorio Colao, Vodafone Group chief executive, said: 'The proposed transaction offers significant benefits for New Zealand businesses, consumers and the country as a whole. TelstraClear's infrastructure and capabilities are highly complementary to those of Vodafone New Zealand. The combined business will have the breadth and depth of resources and skills to meet our customers' long-term integrated communications needs.'