Tuesday, 21 March 2017 11:03

Spark seeks regulator clearance for TeamTalk acquisition Featured


New Zealand’s largest telco Spark is seeking clearance from the competition enforcement and regulatory agency, The Commerce Commission, for its acquisition of network operator TeamTalk.

A week ago, Spark confirmed its proposed takeover of TeamTalk in a deal valued at about NZ$22.7 million with an offer to shareholders of 0.80 cents per share.

The regulator will determine whether the proposed takeover will substantially lessen competition in the telecoms market.

But in its application to the Commission, Spark contends there will be no lessening of competition, particularly for the CityLink business which operates in Wellington and the Auckland CBD.

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“Spark does not own any local access fibre network assets in either the Wellington CBD or Auckland CBD, or elsewhere in New Zealand,” the company says in its application.

The telco has now applied to the commission to clear the way for the acquisition to go ahead and to either directly or indirectly acquire up to 100% of the shares of TeamTalk.

TeamTalk services include delivering access to fibre networks for larger organisations and businesses in the main centres on digital mobile radio and Internet and voice services to hard-to-reach areas.

In a formal statement announcing the application from Spark, the Commission says it must determine whether the competition that would be lost with the merger would be substantial and substantially lessen competition in a market.

Confirming its takeover offer last week, Spark said, if accepted by shareholders, it would give it ownership of fibre in Wellington and wireless rural Internet service provider Farmside.

Spark’s chief financial officer David Chalmers said he strongly believed the offer was in the best interests of TeamTalk shareholders, “many of whom have seen the value of their investment in TeamTalk relentlessly decline over recent years”.

“This offer allows TeamTalk shareholders to achieve a price for their shares that is 78% higher than the last closing price before Spark issued its Notice of Intention, and an 82% premium on a three-month volume weighted average price basis,” Chalmers said.

Chalmers said the New Zealand telecommunications market continued to change rapidly, and as a result TeamTalk faced “many headwinds”.

“In particular, the UFB network has created pressure for the owners of competing fibre, including CityLink, which also needs to invest significant sums to underground portions of its Wellington fibre due to the retirement of the trolley-bus network,” Chalmers said.

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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