Telstra sells New Zealand operations to Vodafone for $670 million

Telecom Lead Asia: Australia-based Telstra is quitting
the New Zealand telecom market by selling its business to British telecom major

Under a deal worth $670 million, Vodafone New Zealand
will acquire TelstraClear’s voice and data services along with network
infrastructure in New Zealand.

Vodafone New Zealand will also be acquiring
TelstraClear’s fixed-line and Internet operations, which hold  16 percent
of New Zealand’s broadband market.

The cash purchase is expected to close before the end of
the year subject to regulatory approval. The deal will further pose threat to
the reign of Telecom New Zealand.

Telstra’s withdrawal from the New Zealand market shows
that scale and integration are needed to justify foreign network investments,
according to Ovum. Telstra has exited a difficult position in New Zealand,
while Vodafone is now a worthy rival to Telecom New Zealand in both mobile and
fixed,” said David Kennedy, research director, Ovum.

The acquisition of TelstraClear is part of Vodafone’s
ongoing global strategy to use fixed assets to support an integrated operation,
especially in the enterprise segment.

Under this global strategy, Vodafone is expanding its
business aggressively. The telecom major has recently got regulatory approval
from European Union (EU) regulators to complete the proposed $1.6 billion
acquisition of Cable & Wireless Worldwide (CWW).

Speaking on the market dynamics of the New Zealand
industry, David added, The market will become more rational following the sale
of TelstraClear, with two large integrated and scaled operators, alongside
smaller value-seeking players to keep competition alive and well.”

With the sell-off of NZ operations, Telstra will start
focusing on winning mobile and Internet customers in its home market.

On the other hand, Vodafone New Zealand will get a
stronger foothold in fixed-line services with around 30 percent of the
fixed-line broadband market.

Additionally, Vodafone will also be able to compete with
Telecom in buying access to ultra-fast broadband, which is expected to be
rolled out in New Zealand by 2019.

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