ComCom clears TelstraClear sale to Vodafone

Commerce Commission chair Mark Berry says the merger is unlikely to lessen competition in telco market

Vodafone has been given the green light to buy TelstraClear by the Commerce Commission.

In a statement this morning chair Mark Berry says the Commission is satisfied that “the proposed acquisition would be unlikely to substantially lessen competition in any of the relevant markets”.

Vodafone announced in July that it intended to buy TelstraClear from its parent company Telstra in Australia for $840 million.

“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,” Berry says.

“The Commission did not find any significant business overlap between Vodafone and TelstraClear in the provision of either mobile phone services or fixed line services to large businesses. Finally, Vodafone would not acquire all of the radio spectrum presently owned by TelstraClear. Some of the spectrum will be transferred to TelstraClear’s parent, Telstra Corporation, and will be available for purchase by other telecommunications companies.”

TelstraClear has spectrum in the 1800MHz and 2100 MHz ranges. Vodafone has 90Mhz of spectrum equally shared in 900MHz, 1800MHz and 2100MHz and Telecom has 110MHz from 850MHz to 2100MHz.

Aside from spectrum allocation, TelstraClear other assets include:
• HFC cable in Christchurch and Wellington
• 16 percent of home broadband market (about 200,000 customers)
• National backhaul network
• Around 50,000 MVNO customers (it resells services on Vodafone’s network)
• High-end business customer base
• 1300 full time staff and around 600-700 indirect employees.

In the fixed line market the combined Vodafone/TelstraClear company will have around 29 percent market share, compared to rival Telecom which has around 50 percent. In the mobile market Vodafone has around 47 percent, Telecom 31 percent and 2degrees about 19 percent.

Vodafone CEO Russell Stanners says in a statement this morning that acquistion combines two teams with complementary skills to offer fixed and mobile communications services to customers across New Zealand.

“This acquisition will allow us to combine our strength in mobile with TelstraClear’s strength in fixed communications solutions. It means we can meet customers’ constantly evolving communications needs – whether that’s mobile services, broadband, pay TV, or sophisticated ICT services – from the Far North to Southland.”

The merger is expected to take around 18 months to complete, with Stanners remaining as CEO of the combined company