Q&A: Sky-Vodafone merger

Photo / Brett Phibbs

Sky Network TV has announced it is planning to buy Vodafone New Zealand for $3.44 billion in cash and shares in a merged business that would provide telecommunication and entertainment content.

How big will the new company be?
As part of the deal, Vodafone was valued at $3.4 billion, while Sky TV is valued at $2 billion. These valued suggest the merged company could be worth $5.4 billion.

Who will front the company?
Vodafone Group in the UK will own 51 per cent of the shares and Vodafone NZ boss Russell Stanners will be the chief executive of the merged company. Sky TV boss John Fellet will be chief executive of the television and entertainment arm of the company. Vodafone executives have been earmarked for top jobs and Board appointments.

What will it mean for Vodafone customers?
It's unclear exactly what it will mean, but Vodafone customers haven't been offered an integrated streaming service as part of their contracts, like Spark customers get with Lightbox, and the merger could allow that to happen.

What will it mean for Sky customers?
It's unlikely the merger will have any major impacts on Sky subscribers. Both companies have had marketing deals and bundled billing for a number of years. One of Sky's most important products is screening All Blacks games and this contract was recently renewed for a further five year term. This covers all All Blacks tests, Super Rugby and the domestic ITM cup.

What does the market think?
Investors reacted positively to the announcement, pushing Sky shares up 20.6 per cent in early trading this morning and a market insider said the merger was "a good option for two challenged businesses."

What does it mean for Spark?
Spark managing director Simon Moutter said the telco competes hard with Vodafone every day, but doesn't see Sky as a competitor. Moutter said Vodafone and Sky have been closely integrated for a couple of years and the merger wouldn't pose a different challenge for the company.