Competition watchdog sets out issues clearing Vodafone NZ takeover

Friday, 31 May 2019

Commission could reach decision on Vodafone NZ takeover as early as July.

The competition watchdog has begun considering Infratil's application to buy a half share of Vodafone NZ, publishing a statement on the 'preliminary issues' it will consider when deciding whether to clear the purchase.

Infratil and Canadian investment company Brookfield said this month that they had agreed to buy Vodafone NZ for $3.4 billion, subject to approvals.

The commission currently says it expects to reach a decision by July 15, though it is common for its rulings on takeovers to be delayed.

Infratil has indicated it could sell its controlling 51 per cent stake in Trustpower, which also sells broadband, were its stake in Trustpower to be viewed as a barrier to it buying half of Vodafone, though Infratil chief executive Marko Bogoievski has downplayed that as unlikely.

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Infratil chief executive Marko Bogoievski is not expecting opposition to the buy-out of Vodafone NZ from the Commerce Commission but indicated it applied for clearance to be on the safe side.

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'Statements of preliminary issues' rarely give much insight into how the commission is likely to rule on an application.

The commission's statement noted the proposed acquisition 'would result in overlap in the supply of fixed line broadband and voice services to consumers, as well as limited overlap in the supply of those services to business customers'.

'Given Trustpower's plan to supply wireless broadband and mobile services to consumers, there are also potential future overlaps in those markets,' it noted.

Vodafone had a 26 per cent share of the broadband market last year, while Trustpower had a 5 per cent share according to the commission.

The commission said Infratil was arguing 'the number and strength' of existing and potential competitors in the broadband and phone markets meant there would not be a competition issue.

Barriers to existing utility providers expanding their offerings to include 'bundled' services that included broadband were low, and despite Trustpower's current plan to begin offering mobile services, the proposed acquisition would not affect the strength of existing competition between mobile network operators, Infratil argues.

Bogoievski said when announcing the proposed acquisition that Infratil would seek clearance from the Commerce Commission to ensure it was 'in clear territory'.

Vodafone rival 2degrees has meanwhile posted a profit of just under $19.6m in the year to December, up by $570,000 on its result last year, in its accounts posted with the Companies Office.

2degrees' revenues grew 10 per cent to $806m.

The results were largely pre-emptied when owner Trilogy International Partners posted its annual result on the Toronto stock market in April.