Spark New Zealand is considering its next move after Sky Network Television said it won't delay a planned merger with Vodafone New Zealand for a few days to allow for appeals if the deal gets regulatory approval next week.
The Commerce Commission is scheduled to make a decision on the deal on February 23, with the companies set to create the country's largest telecommunications and media group, with Sky TV buying Vodafone NZ for $3.44 billion, funded by a payment of $1.25b in cash and the issue of new Sky TV shares at a price of $5.40 per share. Vodafone becomes a 51 percent majority shareholder in Sky TV, in what amounts to a reverse takeover. The pay-TV operator will borrow $1.8b from Vodafone to fund the purchase, repay existing debt and use for working capital.
Spark, Trustpower and Internet New Zealand yesterday asked the firms to hold off completing the merger for a few days if the regulator signed off to give them time to weigh up the decision and lodge an appeal, something Sky TV today rejected.
Simon Moutter, Spark chief executive, told an analyst briefing he is considering options after that rejection.
Spark objects to the merger on the grounds that it would restrict access to popular sports coverage, and that an effective wholesale regime is necessary to prevent the monopoly position shifting into another market, he said.
"With the merger approved, we think New Zealanders will have fewer choices on how to consume the sport they want available from one company," Moutter said. "If the merger's not approved, then Sky will be highly incentivised to work with all broadband companies to produce a range of sporting products and bundles that can be delivered in a new way across everyone's services and New Zealanders will be far better off and so will Sky in our view."
Commerce Commission approval has been delayed several times. In October the regulator raised concerns about what impact the deal would have on competition in the market, saying while consumers may benefit from cheap services at first, other broadband and mobile providers could lose the ability to build scale in their businesses and become weaker rivals.
Sky said it didn't see "any proper basis for seeking an interim stay from the courts" and would oppose any application
"Sky has full confidence in the New Zealand Commerce Commission (NZCC) and its processes," the pay-TV company said. "In the event, the NZCC provides clearance in respect of the proposed merger, Sky intends to proceed to completion in an orderly manner upon satisfaction or waiver of any outstanding conditions."
Spark's Moutter said if the deal is approved it would have "a profound impact on the industry structure and industry playing field" and will warrant a "meaningful" response.
Sky TV shares fell 3.5 per cent to $4.43 and Spark shares were down 3 per cent to $3.60.