Vodafone NZ in merger talks with Sky

The pay-TV provider is in a trading halt pending merge negotiations with telecommunications giant Vodafone NZ.

Vodafone NZ is considering a merger with Sky, the pay-TV operator has confirmed after its shares on the New Zealand Stock Exchange (NZX) were placed in a trading halt on Wednesday.

"Following recent media speculation, Sky confirms that it is in discussions with Vodafone Group Plc regarding a potential transaction involving a combination of the businesses of Sky and Vodafone New Zealand," Sky said in a statement to the NZX.

"The discussions are ongoing and incomplete and may not result in a transaction occurring."

In response to a request for comment, Vodafone NZ referred only to Sky's NZX statement.

Sky and Vodafone NZ already offer bundled deals in partnership, which involve pay TV, broadband, and phone services.

Sky has retained Citibank for advice on options for what analysts have estimated will be NZ$400 million of surplus capital, once Sky's expenditure program winds down. Sky TV's market capitalisation is NZ$1.7 billion. Its shares last traded at NZ$4.47, having declined by 28 percent over the past year thanks to increasing competition from video-streaming services Netflix and Lightbox.

Vodafone NZ last year reported a NZ$121 million loss for FY15, a substantial increase from the NZ$28 million recorded for FY14. Revenue also declined from NZ$2.05 billion to NZ$1.96 billion.

Vodafone NZ's mobile network was last month named the best in terms of call quality and clarity, data speeds, latency, and web-browsing performance by P3 Communications, ahead of rivals Spark and 2degrees.

According to a recent New Zealand Commerce Commission report on the state of mobile telecommunications competition among business customers, 81 percent of all business customers responding reported being "reasonably satisfied" with Vodafone NZ services.

Out of all respondents to the research, 25 percent rated Vodafone NZ as having the most reliable coverage; 24 percent as having the best customer service; 23 percent as having the best pricing; 29 percent as being the best at good invoicing; and 24 percent as the best at bundled solutions.

Vodafone NZ last week also announced switching on the final cell site in the New Zealand government's NZ$300 million Rural Broadband Initiative (RBI), after Vodafone built 154 new rural cell sites across the country in partnership with Chorus and the federal government.

With AAP

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