2degrees' parent's shares in trading halt, pending delisting

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Whatever 2degrees' immediate future holds, it will not be part of a listed entity.

Shares in the Kiwi telco's corporate parent Trilogy International Group have been put into a trading halt on the Toronto Stock Exchange, pending a delisting, according to a February 7 filing.

On December 31, the Seattle-based Trilogy said it (and minority shareholder Tresbrit) had entered an agreement to sell 100 per cent of 2degrees to Voyage Australia.

Voyage Australia is a joint-venture formed by ASX-listed Macquarie Group and Aware Super (Australia's largest superannuation fund) to buy Vocus Group for A$3.5 billion in July last year. Vocus Group's NZ operation, which includes Orcon, Slingshot, power retailer Switch Utilities and a nationwide fibre network, was recently rebranded as Orcon Group.

Voyage plans to merge 2degrees and Orcon - currently the number three and four players in the NZ telecommunications market by revenue.

The Commerce Commission is due to rule on the merger in March.

Experts expect the regulator to greenlight the deal, given 2degrees and Orcon Group have complementary rather than competing assets, and together should increase market competition by providing stronger competition to market leaders Spark and Vodafone NZ.

The ComCom did not raise any major stumbling blocks in an issues document released earlier this month.

As talks between their respective parents began in October last year, Orcon Group and 2degrees put their respective IPO plans on hold.

Jarden head of research Arie Dekker told the Herald it was unlikely the merged entity would list. Access to capital was constrained under their previous ownership, given Trilogy and Vocus Group's relatively high levels of debt. But new owners Macquarrie and Aware had deep pockets - negating the need to raise funds via an IPO.

An Orcon insider confirmed Dekker's thesis about the merged business, telling the Herald, "There are no plans for an IPO. It's off the table."

Trilogy's shares jumped from C$1.85 to C$2.38 on December 31 as the Voyage deal was announced before settling back.

Before their suspension, shares were trading at C$2.17 for a C$186m ($216m) market cap.

While 2degrees has delivered five years of solid profits, Trilogy's other asset - Bolivian telco NuevaTel (trading as Viva) - has performed badly amid an economy in turmoil, dragging down the group's overall worth.

Trilogy has put Nuevatel on the block. There was no immediate update on a possible trade sale. In November, Trilogy took a US$114m on NuevaTel, and warned that the Bolivian telco's situation could deteriorate further. It seems unlikely that 2degrees will miss being in the same stable as its South American counterpart.

The merged Orcon Group and 2degrees will be known as 2degrees. It will be headed by Orcon Group CEO Mark Callander, with 2degrees' current chief executive Mark Aue scheduled to exit stage left when the transaction completes.

Although Trilogy is selling 100 per cent of its stake in 2degrees, its founder and chairman John Stanton will retain a couple of ties with New Zealand.

The telecommunications billionaire is still on the boards of CostCo and Microsoft.

CostCo is currently building its first store in New Zealand - an airport-size construction in Westgate, northwest Auckland. Microsoft is building its first data centre in NZ just a stone's throw away.