Going, going, gone: Vodafone NZ sold for $3.4b

Vodafone has sold its New Zealand business to Kiwi infrastructure investment company Infratil and Canadian asset management firm Brookfield Asset Management in a NZ$3.4 billion deal.

Vodafone New Zealand chief executive Jason Paris dubbed the deal “the absolute best of both worlds for customers,” claiming it gave New Zealand’s number one mobile telco and number two fixed broadband player “the backing of two world class and long-term investors, while enabling it to still tap into Vodafone’s global expertise.”

Talk of a potential sale reignited last week when Infratil confirmed talks were taking place and a trading halt was put in place on the New Zealand Stock Exchange. Infratil owns airport, transport, electricity generators and retailers across Australia and New Zealand, including Canberra Data Centres, TrustPower – which as well as providing power is New Zealand’s joint fourth largest fixed broadband player with 5% market share – RetireAustralia and NZ Bus.

Brookfield, meanwhile has a focus on owning and operating assets in the infrastructure, real estate and renewable power markets and has more than US$365 billion in assets under management.

Vodafone NZ had been planning to list on the NZX after the New Zealand Commerce Commission axed its plans to merge with Sky TV.

The company had revenue of NZ$2.0 billion in the 12 months to March 31, 2019, with underlying EBITDA of NZ$463 million for the period.

Paris, who took on the top role with the telco late last year, says the key things – strategy, people, management team, brand and ability to tap into Vodafone’s global products and services – ‘remain the same’.

“What changes is our owners, who back our ambitious plans for New Zealand and who share our views on the importance of creating sustainable, long-term profitability in order to reinvest in the future. So it really is the best of global and local.”

Paris says the company will look to maximise the opportunities presented by new and emerging technologies, such as IoT, 5G, artificial intelligence and data analytics.

“And we know we have a lot of work to do to deliver more consistent customer service so we’ll focus even more on getting it right for our customers, first time, every time.”

Infratil says agreements in place with Vodafone Group – under which Vodafone NZ will become the company’s largest Vodafone Partner Market worldwide – will see global roaming remain in place while other services are expected to be transitioned away from Vodafone Group over the next one to five years.

In a statement to the NZX, Infratil says the acquisition of New Zealand’s leading mobile telco company is ‘transformational’ for Infratil and complements its acquisition of Canberra Data Centres in 2016.

Marko Bogoievski, Infratil CEO says Vodafone NZ was rigorously assessed over the past few months. “We have done an extensive amount of work to ensure we understand the opportunities available to the business, in particular, the ability to use next generation 5G technology to significantly enhance network capability and future services to Vodafone NZ customers,” he says.

Analysts have suggested the deal will provide Vodafone with the funding for a 5G build.

Bogoievski says the deal gives some local ownership to Vodafone NZ ‘which will be important in terms of how we work together to grow the business over the coming years’.

Vodafone NZ has been in the midst of a project to cut costs, return to business growth and improve customer experience. That project has seen a move to agile – including reportedly will see it cutting up to 400 staff from its nearly 3,000 strong workforce – and an IT simplification and automation program enabling customers to be set-up, served and billed from a single platform.

The deal is expected to complete in August, subject to regulatory approval from the New Zealand Overseas Investment Office and the Commerce Commission.

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