Telco 2degrees' US owner confirms merger talks with NZ broadband operator Orcon

2degrees chief executive Mark Aue. Photo / Dean Purcell

By RNZ

The United States owner of telecommunications company 2degrees has confirmed speculation that it is in talks to merge the business with local broadband operator Orcon.

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2degrees majority owner Toronto-listed Trilogy International Partners (TIP) said it had entered into discussions with Orcon's owner, Macquarie Asset Management and Aware Super, to discuss the possibility of combining both companies.

"The potential merger would bring together 2degrees' and Orcon Group's complementary assets across mobile, broadband and fixed line services," TIP said in a statement to the Toronto Stock Exchange.

"With a shared challenger mindset, 2degrees and Orcon Group would create an integrated fixed-mobile business of scale, providing better service to customers in New Zealand's mobile and fixed telecommunication markets."

Orcon Group, formerly known as Vocus New Zealand, owns a range of broadband operations such as Slingshot, Orcon, and Stuff Fibre.

Local investment analyst Greg Smith of Fat Prophets said a union of 2degrees and Orcon would have nearly 20 per cent of the New Zealand market, revenue touching $1 billion, and earnings of $200 million.

Trilogy said any possible merger would be subject to regulatory approvals, the completion of due diligence and the negotiation of final terms.

"There can be no assurance that any transaction will be completed as described above or at all," it said.

The confirmation from Trilogy laid to rest a week filled with speculation about the future of 2degrees after its spokesperson said its plan to list on the New Zealand Stock Exchange by the end of the year had been put on pause.

Media reports suggested the company was mulling a possible merger with Orcon, which was also expected to be floated on the stock exchange this year.

"Macquarie Asset Management and Aware Super have agreed to pause the public listing preparations of their respective subsidiaries while they discuss the potential merger," Trilogy said.

- RNZ