Vodafone boosts fixed-line business with £430M New Zealand buy

Vodafone has acquired over 6,000 km of fibre network in New Zealand (NZ) from Australia's Telstra for £430 million.

This move by Vodafone, which is already the largest mobile operator in NZ, will more than double the size of the company's fixed-line services and take its share of this market to nearly 30 per cent.

Analysts said the price reflected the importance of the acquisition, which combines the market leader in mobile and the second largest fixed-line business, according to the Financial Times.

Macquarie analysts told the Wall Street Journal that Telstra achieved a "very good price" for the asset, well above their NZ$550 million estimate.

Commenting on Vodafone's investment, Tony Brown, senior analyst at Informa Telecoms & Media, said: "The acquisition of TelstraClear [the NZ fibre network] follows a line of similar moves by Vodafone in other countries and--if approved by the NZ Commerce Commission--will make Vodafone an even tougher opponent for fixed-line market giant Telecom New Zealand."

Vodafone told the Financial Times that the deal would create "significant savings from a combination of the two companies' networks, commercial operations and administrative functions," and would be accretive to earnings per share from the second year. "

But analysts have raised worries over the impact this sale to Vodafone could have on incumbent Telecom NZ.

"NZ Telecom would have a very, very difficult time moving forward with a strengthened Vodafone. That may further build the case for an integration of Telecom NZ and Australia's Telstra," Australia-based independent telecoms consultant Paul Budde told Reuters.

However, for the Australian telco giant Telstra, the sale represents an exit from NZ having failed to gain traction due to its lack of access to a mobile network.

While Vodafone said the purchase of TelstraClear includes a condition that bars Telstra from re-entering the New Zealand market, details were not released as to how long this restriction will last.

For more:
- see this Financial Times article (reg. req.)
- see this WSJ article
- see this Reuters article

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