Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

TelstraClear boss stepping down after sale

The Commerce Commissionhas given the green light for Vodafone's $840 million takeover of TelstraClear. Photo / NZH
The Commerce Commissionhas given the green light for Vodafone's $840 million takeover of TelstraClear. Photo / NZH

TelstraClear chief executive Allan Freeth is leaving the company, following its sale to Vodafone New Zealand.

The Commerce Commission announced its approval of Vodafone's $840 million takeover of TelstraClear this morning.

In a statement just released, TelstraClear said Freeth's final day would be on Thursday.

Freeth has been with the company, which has 1300 staff, since 2005.

TelstraClear chairman Gordon Ballantyne said the company had grown from a fledgling challenger to a major profitable player under Freeth's leadership.

"Allan has also played a key part in the sale of Telstra Clear to Vodafone NZ, which we expect to complete shortly. We thank Allan for his commitment and effort over the seven years he led the company and wish him all the best for the future," Ballantyne said.

TelstraClear's sale was announced in July but needed permission from the regulator before it could go ahead.

According to commentators, the takeover will give Vodafone more clout to challenge Telecom.

Telecommunications Users Association of NZ chief executive Paul Brislen said in a blog post yesterday that it would "redefine an industry that's already undergone dramatic upheaval over the past dozen years".

"The upside to the deal, however, means we finally have a competitor that can take on Telecom in the fixed line market," he said.

"In order to really take on Telecom in its heartland, only Vodafone has the scale and with TelstraClear's assets (both network and people) it would have the ability."

But in a statement today, Telecom said big operational changes could be a "distraction" and that the company would look to engage with any of their rivals' "unsettled" customers.

"We've always respected Vodafone and TelstraClear as competitors and we don't see that changing now they're coming together as one company," said Telecom's chief executive Simon Moutter.

"At the same time, we know from past experience how potentially distracting significant operational change can be to an organisation and to their customers.

"We're keen to engage with any prospective customers who may be unsettled by the Vodafone/TelstraClear merger and want choice in their telecommunications company."

In approving the takeover, the commission said it did not find any significant business overlap between Vodafone and TelstraClear in the provision of either mobile phone services or fixed line services to large businesses.

"In reaching its decision, the Commission considered that the merged entity would continue to face competition from Telecom, as well as Orcon, Slingshot and other smaller businesses in providing fixed line voice and broadband services to residential and small business customers," said Commerce Commission chair Dr Mark Berry.

The Commission said Vodafone would not acquire all of the radio spectrum owned by TelstraClear and some of the spectrum will be transferred to TelstraClear's parent, Telstra Corporation, and be available for purchase by other telecommunications companies.

The commission is still to release its full reasons for its decision and a spokesperson said this was likely to be put out in a few weeks.

"This acquisition will allow us to combine our strength in mobile with TelstraClear's strength in fixed communications solutions. It means we can meet customers' constantly evolving communications needs - whether that's mobile services, broadband, pay TV, or sophisticated ICT services - from the Far North to Southland," said Vodafone New Zealand chief executive Russell Stanners, who will head the merged company.

Stanners said the company will operate as two separate business units initially, with a clear focus to continue to deliver a great experience to Vodafone and TelstraClear customers.

The two units will remain standalone over the next six months and the TelstraClear brand will be phased out over the next 18 months.

A Vodafone spokesperson said this morning there would be "overlaps" when the merger takes place, but could not comment on how many people could be made redundant as a result of the takeover.

"We now need to look at the two business units to determine the best overall structure to best support our customers. Until we've done that review it is too early to speculate on jobs," she said.

At present Vodafone has around 1900 staff while TelstraClear has 1300.

Research from AUT University released last year suggests Telecom has a 49 per cent share of the home broadband market, while TelstraClear and Vodafone have 16 per cent and 13 per cent respectively.

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