Tuesday 30th October 2012
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The Commerce Commission has given the green light to Vodafone New Zealand's $840 million takeover of TelstraClear, saying there isn't any significant business overlap between the two telecommunications carriers.
The antitrust regulator has cleared the purchase, saying the companies' provision of fixed-line and mobile services to large businesses didn't cross over, and that TelstraClear-parent, Telstra Corp, would keep some radio spectrum which could be bought by rival carriers.
"In reaching its decision, the commission considered that the merged entity would continue to face competition from Telecom, as well as Orcon, Slingshot and other smaller businesses in providing fixed-line voice and broadband services to residential and small business customers," chairman Mark Berry said in a statement.
Auckland-based Vodafone expects to reap savings through ending management and back-office double-ups, and by using TelstraClear's backhaul and transmission services, according to its notice seeking clearance.
The merged company will also cut its reliance on Chorus, the dominant telecommunications infrastructure firm, for wholesale network access. Vodafone, the country's biggest mobile phone operator, boosted annual profit 16 percent to $175 million in the 12 months ended March 31 from $151.5 million a year ago, even as revenue fell 4.3 percent to $1.62 billion.
That was better than what Vodafone foreshadowed last year when it said sales would fall $124 million and comprehensive income by $55 million due to the Commerce Commission imposing a reduction in mobile termination rates, the fees carriers charge each other for ending a call on a rival network.
TelstraClear lifted earnings before interest, tax, depreciation and amortisation climbed to A$99 million in the 12 months ended June 30, from A$84 million a year earlier. Sales fell 2.3 percent to A$502 million. Australian parent Telstra booked a A$130 million impairment charge against goodwill for the TelstraClear prior to the sale.
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