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Vodafone, Sky NZ merger might be back on after all

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Like a 1980s rom com, the will-they-won’t-they saga surrounding New Zealand’s possible telecoms mega-merger has taken another twist.

Vodafone seems to have decided that mergers are the way forward for many of its international interests and almost a year ago it announced plan to merge its NZ operations with those of Sky to create a multiplay giant in that country. But after the months of customary procrastination, the New Zealand Commerce Commission vetoed the move earlier this year, apparently just because it didn’t fancy it.

Now it turns out that the competition watchdog might not have the final say on the matter as both companies have significant overseas ownership. That apparently means jurisdiction falls under the Overseas Investment office and it doesn’t seem to consider effects on competition when assessing such things, confining itself instead to just taking a view on the commercial viability of the move.

“The merger of these two companies required Overseas Investment Act approval because Vodafone and Sky are more than 25 percent owned by overseas interests and the purchase price and asset value are each more than $100 million,” said the announcement. “The merger of the two companies met the criteria required by the Overseas Investment Act 2005.

“The fact that Vodafone and Sky were recently unsuccessful in their application to the Commerce Commission for clearance to this merger was not relevant to the Overseas Investment Office’s assessment. The Commerce Commission test relates to competition in a market which is different to the criteria that the Overseas Investment Office is required to consider for an application involving significant business assets.”

At time of writing neither company had formally said this means the deal is back on, and presumably there is still some risk associated with continuing with the merger in the face of NZCC opposition. But the chances of that happening are presumably significantly greater in the light of this new development.


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