Vodafone NZ will be newly freed and focused if its $3.4 billion 50:50 buyout by Infratil and Canadian investment company Brookfield goes ahead, analysts were told on a conference call.
Infratil chief executive Marko Bogoievski - who is lined up to chair the post-deal telco - said Vodafone NZ management had been distracted over the past three years by the Sky TV merger attempt and the mooted initial public offering (IPO).
He added that companies with offshore parents can "suffer from a lack of investment" and "could respond to a bit of love".
Vodafone NZ chief executive Jason Paris - who, like other managers, will stay on post-deal - said his company had been a year behind rivals in launching an unlimited data mobile plan.
He saw scope for pushing some products harder, including Vodafone TV (whose content is streamed over the internet) and, in particular, fixed-wireless broadband.
Spark has made hay over the past couple of years in fixed-wireless, which uses a 4G mobile network to deliver broadband into a home - eliminating the need for a landline and, cutting wholesale Chorus out of the loop, making it a much more lucrative business than fixed lines.
While Vodafone has been tentative, barely promoting the technology, Spark has signed up around 130,000 fixed-wireless customers. Paris saw a push to move 15 per cent of Vodafone NZ's customer base to fixed-wireless over the next two years.
As much as he highlighted Vodafone NZ's new freedom, Paris also emphasised continuity. Infratil and Brookfield will be able to continue using the Vodafone brand, and get preferential roaming rates and access to Vodafone Group's technology in areas like streaming and the Internet of Things under a licensing deal.
Paris said, "We've gone into a lolly shop and grabbed all the lollies we loved and left the ones we don't."
Investors didn't seem to be immediately sharing the delight. Infratil shares fell as much as 6.1 per cent, and ended the day at $4.48, down 2.6 per cent (the stock is still up 39 per cent over the past year).
Were investors worried that a Vodafone NZ unchained would also be a Vodafone NZ that was a little too free with its cheque book?
Bogoievski said there was no cap-ex fright. The dip was the expected reaction to Infratil's plan for a $400 million equity raise, which Infratil will use to help fund its share of the deal.
The Infratil boss' take was "reasonable", First NZ Capital institutional research head Arie Dekker said.
But he qualified, "There is an element of catch-up capex in the forecasts that reflects Vodafone NZ's ability to take its own view, outside Group strategy, on things like fixed wireless. It will also reflect investment to transition away from Vodafone Group and simplify the business, enabling operating cost savings in much the same way as Spark re-engineered its business."
The $3.4b deal will see Infratil and Brookfield chip in $1b equity, Vodafone Group the same amount, and Vodafone NZ take on $1.4b debt.
"While that level of debt looks high compared to Spark, Spark takes a conservative approach on its balance sheet through its focus on retaining an A credit rating," Dekker said.
"With relatively stable earnings that level of debt is probably okay although there are high investment requirements to take into consideration also with capex accounting for over half of ebitda."
In an NZX filing on the deal based on yet-to-be-audited figures, Infratil said Vodafone's New Zealand business had revenue of $1.99b in the year to March 31, adjusted ebitda of $463m, capital expenditure of $253m and an adjusted operating free cash flow of $210m.
Bogoievski says the timing of the deal is down to the Commerce Commission and Overseas Investment Office, which will assess it for approval over the next few months.
Veteran competition lawyer Michael Wigley says he doubts there will be any clearance issues.
The only possible fly in the ointment he sees is Infratil's 51 per cent in Trustpower, which has grabbed around 5 per cent of the retail internet market in recent years by bundling broadband with power.
If this does become a problem, Infratil could solve through divestment, Wigley said.
That could be a little tricky, however. The Commerce Commission would likely veto Spark, 2degees and Vocus as buyers of Trustpower's 100,000-strong base of broadband customers, Wigley said - and the power retailer might be reluctant to offload its telecommunications business given bundles have proved such as successful mechanism for reducing churn.
Infratil offloading Trustpower altogether is not an attractive option, either. Forsyth Barr senior analyst Andrew Harvey-Green recently noted, "Trustpower is the only [Infratil] asset with strong, reliable free cash flow."
Not new to tech
Although Infratil is perhaps best known as the owner of Wellington Airport and NZ Bus, Vodafone NZ won't be its first foray into tech.
In 2016 it bought a half share in Canberra Data Centres (CDC) for A$392m and a year later invested a further A$50m to help fund its growth.
It will also be a case of back to the future - or at least back to the telco industry - for Infratil chief executive Bogoievski, who served as chief financial officer and one of Theresa Gattung's top lieutenants at Telecom during the 2000s.
Asked by the Herald what has changed since his last tour-of-duty in telecommunications, Bogoievski quips, "Probably everything. I tell people not to rely too much on my view because it's so hopelessly out of date."
That notwithstanding, Infratil's tech-sector performance has not been too shabby.
Last month, the company said the value of its 48 per cent stake in CDC had risen to between $841m and $942m.
Harvey-Green cited highlighted smart management of the CDC investment as he maintained his "outperform" rating on Infratil on April 11 and lifted his 12-month target price by 10 cents to $4.45.
Dekker rates it neutral with a $4.37 target.