TelstraClear sale makes sense: analysts

Analysts have said that Telstra's decision to sell its New Zealand subsidiary, TelstraClear, to Vodafone NZ makes sense, but questioned whether regulators will agree.

Telstra announced it would sell TelstraClear's infrastructure and customer base to Vodafone New Zealand for NZ$840 million, provided that regulatory bodies in New Zealand approve the deal.

Ovum research director David Kennedy said that the sale makes sense for both Telstra and Vodafone New Zealand. He said that Telstra didn't have the scale and investment in the TelstraClear network to justify staying, and that the takeover by Vodafone works to Vodafone's advantage.

"Telstra has exited a difficult position in New Zealand, while Vodafone is now a worthy rival to Telecom New Zealand, in both mobile and fixed," he said. "For Vodafone, its acquisition of TelstraClear is part of its ongoing global strategy to use fixed assets to support an integrated operation, especially in the enterprise segment."

Chris Coughlan, research director for Telsyte, agreed that the deal made sense for both Telstra and Vodafone.

"Vodafone is the dominant mobile carrier and has aspirations in the fixed area, acquiring iHug several years ago. This acquisition helps especially with the separation of Telecom NZ," he said.

"Telstra has not been able to get into the mobile infrastructure game in NZ, and the business has been, at best, steady. Exiting was probably a wise move."

Kennedy said that the result of the takeover will have two large, integrated and scaled operators working in the same market with smaller players, and that this would be good for competition.

Yet, Coughlan questioned whether the NZ Commerce Commission would sign off on the deal, given that it would be the effective merger of the second and third biggest players in the telco industry in New Zealand.

"It is not certain that the deal will go through; this essentially brings together the number two and three players in the NZ market, so the NZ Commerce Commission will be considering the deal very closely," he said.