John Fellet says Sky Television will now dust off its "plan B" after the Commerce Commission rejected its proposed merger with Vodafone.

However, the Sky boss doesn't think the company will strike out on its own in the telco market as Vodafone and Spark are too big to take on.

The commission today rejected Sky's and Vodafone's merger proposal.

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The regulator said that Sky's exclusive rights to premium sports content would cause people to switch from rival telcos, thus reducing competition in telecommunications markets.

Sky's share price closed down 13.1 per cent on the news, at $3.78.

Speaking to Larry Williams Drive on Newstalk ZB, Fellet said he was "incredibly disappointed" with the decision.

He said it was odd that similar deals were happening around the world but weren't allowed in New Zealand.

He believed scuppering the merger would "hold up innovation" and that Sky had held back plans it would have otherwise acted on.

"You always have a plan b so we have to dust that off," Fellet said.

Asked about the possibility of appealing the commission's ruling, he said the company would keep its options open.

He said Sky could do a better job of providing a combined internet TV and satellite TV service and would always have some version of the latter because up to 15 per cent of New Zealanders are unlikely to get access to fast broadband.

Asked if Sky would eventually move into the telco market by itself, Fellet told Williams:

"I don't think [we] do by ourselves..Vodafone and Spark are just too big for us to take them on so I'd rather work with all telecommunications partners as opposed to get into that business...I'd rather be real good at what we do."