Will Vodafone buy TelstraClear

Stuff reports:

Telstra has confirmed it was in talks to sell its New Zealand subsidiary to Britain’s Vodafone. …

Deutsche Bank analyst Geoff Zame said the fact Telstra had issued a statement to the markets indicated there was something tangible and promising to the discussions.

The idea of combining the businesses was not a surprise and ”quite logical”, but the way they might be combined was a surprise, he said.

”Most of the rumours tended to be that Vodafone was for sale.” British analyst Ovum had believed TelstraClear might be a possible buyer of Vodafone New Zealand.

A takeover of TelstraClear by Vodafone would probably be negative for Telecom as Vodafone might be willing to invest more money in TelstraClear than Telstra,  Zame said.

Telecommunications Users Association chief executive Paul Brislen said that ”without a mobile division to call its own” TelstraClear was going to struggle in New Zealand. ”Either Telstra needs to put up and invest, or it’s time to call it a day and by the sounds of it, having looked at Vodafone New Zealand and not wanting to pay the asking price, it would seem a reverse offer is on the table.”

The potential deal probably makes sense for both Telstra and Vodafone. TelstraClear has never performed well in New Zealand, and with no mobile presence or fibre involvement has a fairly bleak future.

What assets they do have though, complement Vodafone’s current assets quite well. One industry expert said that he thinks that what Vodafone really wants is the spectrum owned by TelstraClear, which makes sense.

Obviously any deal would need to be approved by the Commerce Commission, but on the surface I don’t think it would put Vodafone into a dominant position – they are losing mobile share to 2 degrees quite rapidly.