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Spark NZ completes sale of international voice business to MNF

After receiving US government approvals, the sale of Spark NZ's international voice business to MNF has been completed more than a year after the purchase.

Australian retail and wholesale voice-over-IP (VoIP) provider MNF has announced the completion of its purchase of New Zealand telecommunications provider Spark's international voice business after receiving approvals from the United States government.

MNF, which rebranded from its previous name of MyNetFone late last year, paid AU$22 million in April 2015 to purchase the global wholesale voice business of Telecom New Zealand International (TNZI), which operates throughout Europe, North America, Asia, and Oceania.

TNZI, which has forecast earnings before interest, tax, depreciation, and amortisation (EBITDA) of between NZ$3 million and NZ$4 million each year, sells voice, data, mobile, and digital services in six counties, and last year reported carrying more than 2.8 billion voice minutes.

TNZI has 220 carrier relationships and interconnection agreements.

At the time, Spark said it was selling the business in order to refocus on its voice operations within New Zealand. Last February, it also sold 60 percent of its stake in Telecom Cook Islands. Spark has retained its international data business, however.

This is not the first move MNF has made into New Zealand; in March 2016, MNF-owned IP voice communications provider Symbio Networks announced that it would be constructing a nationwide voice network in New Zealand, which it will wholesale to service operators and over-the-top (OTT) providers.

"With MNF Group's recent acquisition of TNZI and its focus on investment in infrastructure, the time is now right to step up our activities in New Zealand in order to offer service providers and OTT players a next-generation wholesale provider," MNF CCO Jon Cleaver said at the time.

According to Cleaver, MNF had identified a gap in the market left by New Zealand's bigger telcos, which are choosing to occupy themselves with growing their own retail networks rather than developing the wholesale layer to lease off to the many low-cost OTT operators that are entering the market.

"That's where Symbio fits in: Symbio's solutions are modular and scalable, with the flexibility to accommodate specialised service providers' needs, bringing enhanced innovation and product choice to the New Zealand wholesale voice market," Cleaver said.

Allowing more entry points for OTT providers will increase competition and innovation in the sector, Cleaver added. This is particularly so with the transition from voice to data, meaning customers are downgrading their voice services to cheaper offerings.

MNF in February reported its financial results for the first half of FY16, announcing a net profit of AU$4 million on revenue of AU$83.98 million and EBITDA of AU$8.2 million.

Its profit was up by 29 percent year on year, while revenue jumped by 177 percent and EBITDA by 64 percent. MNF attributed its growth to the contribution of TNZI to the business.

While Spark reported net earnings of NZ$158 million for the six months to December 2015, up 7.5 percent year on year, revenue from voice services fell, reflecting the trend in customers shifting from voice to data-based services. Spark experienced a NZ$50 million or 12.9 percent drop in voice for the half year, down to NZ$337 million.

The New Zealand Commerce Commission, which last week reported the country's annual total retail telco revenue as falling by NZ$60 million over 2015, from NZ$5.17 billion to NZ$5.11 billion, is currently considering the deregulation of wholesale access to Spark's fixed network.

Specifically, the ComCom is examining whether to deregulate local access and calling services offered by means of a fixed telecommunications network; retail services offered by means of a fixed telecommunications network; and retail services offered by means of a fixed telecommunications network as part of a bundle of retail services.

"We understand that the development of hosted IP-based services may provide increasingly competitive alternatives to ISDN/Centrex services by delivering similar functionality and features to business customers over broadband connections," the ComCom said in its draft decision.