Competition concerns cast doubt on Vodafone-Sky deal

1 Nov 2016

Mobile and fixed line operator Vodafone New Zealand has had doubts raised over its proposed merger with local pay-TV operator Sky Network Television. The country’s Commerce Commission says it is concerned that the deal would hamper competition and is deferring its decision on the tie-up; it had been due to give a ruling later this month. The watchdog has written to both companies to express its concerns.

In a statement the regulator said: ‘The Commission is currently not satisfied that the proposed merger will not have, or would not be likely to have, the effect of substantially lessening competition in the telecommunications and pay-TV services markets.’ It went on to add: ‘While consumers may initially benefit from lower prices, rival broadband and mobile providers could lose or fail to achieve scale and become less competitively effective. Over time, this could reduce competition in these markets and potentially enable the merged entity to raise prices or lower the quality of service.’

In June this year Sky unveiled plans to acquire all of the shares in Vodafone NZ for a total purchase price of NZD3.437 billion (USD2.33 billion) through the issue of new Sky shares – giving UK-based Vodafone Group a 51% interest in the enlarged Sky – plus a cash consideration of NZD1.250 billion, to be funded through new debt. Rival operators, including main competitor Spark, have already spoken out in opposition to the deal.

New Zealand, Vodafone New Zealand