M2 snaps up NZ mobile operator in growth bid

Black + White Chief Executive Johnathan Eele during the company's launch in 2008. Photo / Dean Purcell

Australian-listed telco M2 has snapped up mobile operator Black+White as part of a strategy to boost its performance in New Zealand.

The deal sees all the assets of Black+White acquired by M2 New Zealand with Black+White founder Johnathan Eele heading the business.

Shares in M2 New Zealand will be split, with 70 per cent to M2 and 30 per cent to Eele as the sole shareholder of Black+White.

Neither company owns any telecommunications infrastructure, choosing to wholesale access to mobile and fixed-line networks.

For the year ended June, M2 reported net profit after tax of A$16.6 million ($21.45 million).

Eele, a former Telecom executive before starting Black+White in 2008, said the deal was about opening up sales channels for both brands.

"The Black+White brand has been on a fairly steep upward curve in terms of revenue growth. The M2 brand in New Zealand has been going well but it is fair to say it has plateaued in terms of growth, and that was largely due to the fact there wasn't New Zealand management with skin in the game."

Eele said his decision to sell up was driven by the need to get more scale in order to grow further.

"I'm really pleased where I've taken Black+White as a business and as a brand. To get to the next level we need more scale and M2 gives us a lot more potential benefits around access to capital and all sorts of things we can leverage as time goes on," said Eele.

Initially the two brands would operate side by side, but it was likely the company would consolidate into the higher profile Black+White brand.

The deal combines M2's fixed-line telco pedigree with Black+White's mobile-operator focus.

M2 has focused on the small- to medium-sized business market selling through dealers in Auckland, Tauranga and Wellington.

Its marketing is based around a travel-based loyalty programme.

Black+White had launched with plans to make inroads into the pre-pay mobile market, initially appealing to students, before moving recently to target small business owners.

As its sales director, M2 has appointed Troy Elliott, previously managing director of First Mobile, a dealership chain specialising in selling Vodafone's products and services.