Vodafone acquires New Zealand's TelstraClear

Operator group Vodafone has agreed to acquire Telstra’s New Zealand arm TelstraClear, for a sum of NZ$840m ($663m). Vodafone initially voiced its intention to acquire the business in June this year.

The acquisition strengthens Vodafone position in New Zealand, where it is already the country’s largest mobile operator in terms of subscriber base, with 2.4 million customers; 66 per cent of whom are on prepaid contract, and just over one million customers on 3G, according to Informa’s WCIS.

While TelstraClear does not divulge its subscriber numbers, Vodafone claims the firm is the second largest fixed operator in New Zealand and owns New Zealand’s second largest fixed infrastructure, which includes a 6,600km fibre backbone connecting 19 of the country’s largest cities. It also includes an extensive local access network with 2,000km of fibre and 4,500km of copper as well as a cable TV and broadband access network passing 150,000 homes in Wellington and Christchurch.

TelstraClear’s customer base includes government and large corporations, small and medium enterprises as well as consumers.  Vodafone said that the acquisition will enhance its portfolio of fixed communications solutions as it looks to create a leading “total communications company”.

“The combined business will be ideally positioned to capture the benefits of the structural changes underway in the New Zealand market,” Vodafone said in a statement. “This includes the rollout of a wholesale fibre access network to 75 per cent 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 firm added that it expects the acquisition to result in cost and capex savings and will improve its earnings per share from year two and free cash flow per share from year one.

Tony Brown, Senior Analyst at Informa Telecoms & Media, said Vodafone’s acquisition 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 – 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.

“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.”

Tony Brown, Senior Analyst at Informa Telecoms & Media, on the announcement that Vodafone will acquire Telstra Clear in New Zealand.

New Zealand mobile market leader Vodafone’s NZ$840 million acquisition of local fixed-line player Telstra Clear 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 – 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.

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.