Infratil seeks clearance for Vodafone NZ takeover

By Dylan Bushell-Embling
Wednesday, 22 May, 2019

Infratil seeks clearance for Vodafone NZ takeover

One of the two suitors seeking to purchase Vodafone New Zealand has applied for clearance from the nation’s Commerce Commission to acquire up to 50% of the telecommunications company.

New Zealand infrastructure investment company Infratil submitted a clearance application for the proposed takeover.

Infratil owns a 51% stake in Trustpower, a power supply company which also provides telecommunications services and competes in the residential and business fixed line market with Vodafone NZ. Competition approval will therefore be required.

Infratil also recently acquired Canberra Data Centres, and is pursuing the acquisition to expand its data and connectivity portfolio.

The company is proposing to jointly acquire Vodafone New Zealand with investment company Brookfield Asset Management for NZ$3.4 billion ($3.2 billion).

The Commerce Commission announced that it will give clearance to the proposed merger if the regulator is “satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market”.

The Commission last week published early details of its study into competition into New Zealand’s mobile market — in which Vodafone NZ is the market leader.

The research has found that competition is generally improvement, with the market’s three operators performing well on most measures of quality, but that there is significant room for improvement in areas including data pricing and 4G coverage.

On the fixed line front, the regulator has been tasked by parliament with drawing up a utility-style regulatory regime for fibre networks including the national Ultrafast Broadband (UFB) network.

The Commission has released a discussion paper covering its emerging views for designing the regulatory framework, which will be designed to prevent Chorus — the main network company for the UFB — from earning excessive profits at the expense of network quality and consumers.

Under the in-development framework, Chorus would be subject to revenue caps and required to meet minimum quality standards. Chorus and the local fibre companies assisting with the rollout would also be required to publicly disclose information about their performance.

“The rules we are developing that underpin the revenue caps for Chorus will have an impact on the price consumers end up paying for broadband. We are keen to hear from consumer advocates on our current thinking around how we treat key issues such as the cost of capital and what is included in Chorus’s regulated asset base,” Telecommunications Commissioner Dr Stephen Gale said.

“In terms of quality, we are currently looking at which dimensions of quality matter to New Zealanders, and how they will flow through to standards we will require Chorus to meet. The quality dimensions are based on the stages of the fibre service life cycle and include customer service, service availability and performance among others.”

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