Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Spark chases lower input costs in TeamTalk takeover bid

Tuesday 21 March 2017 01:32 PM

Spark chases lower input costs in TeamTalk takeover bid

By Paul McBeth

March 21 (BusinessDesk) - Spark New Zealand wants lower costs from owning fibre assets in the Auckland and Wellington central cities in its pursuit of telecommunications minnow TeamTalk.

The country's biggest telecommunications company's rationale for mounting a takeover bid for TeamTalk is part of its plans to have more control over fibre assets, which would give the firm "more control over its input costs and provide an improved experience for its business customers" and scope to compete more aggressively with rivals which own infrastructure, as well as wholesale network owner Chorus, it said in its application to the Commerce Commission.

Spark says the acquisition would tick off that objective in Wellington city where TeamTalk's CityLink business has a big enough fibre network "to generate economic efficiencies for Spark, by enabling Spark to provide business data services to end users in the Wellington CBD using these local access fibre network assets," it said.

The Auckland-based company downplayed any overlap between its businesses with TeamTalk and said it would, in fact, improve competition by providing a strong incentive for Spark to invest in the network and provide a competitive constraint for other network owners.

"The commission will be aware that customer service challenges that arise in a vertically disaggregated model have been frustrating for Spark in recent years," it said. "Greater control over the network serving its customers will enable it to better compete with other RSPs that either have their own local access fibre inputs (or unbundled copper access) in Wellington, such as Vodafone (and to a limited extent Vocus) and place increased competitive constraint on other wholesale providers to improve service performance."

Spark is offering 80 cents per share to buy TeamTalk, valuing the business at $22.7 million, a 72 percent premium to where the stock was trading at before the takeover emerged. TeamTalk has urged shareholders to hold off from accepting the offer until they get a formal recommendation, which is expected this week. The shares last traded at 78 cents.

TeamTalk's managed data services and data centre services were already operating in highly competitive markets and Spark didn't see them as raising any competition issues, while there weren't any significant barriers to competing with free Wellington WiFi and there was no overlap between the firms in mobile radio.

Spark said TeamTalk's Farmside rural broadband and mobile service was too small relative to Spark to have a material effect on the broader market, while TeamTalk's digital microwave radio was used for different access points to Spark.

Much of Spark's application deals with TeamTalk's ExchangeNET business, which owns information exchanges that enable traffic between peer organisations. The main customers of these services are internet service providers, large enterprise and government entities, and content providers such as Netflix to allow faster connection with cached information.

Spark said it wouldn't have any power to restrict access to those exchanges if the acquisition is allowed because of the available rivals.

Spark shares rose 0.6 percent to $3.42.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Statistics: Business Research And Development Up 29 Percent

Computer services and machinery manufacturing firms led the way in an almost 30 percent lift in business spending on research and development (R&D) in 2016, Stats NZ said today. Businesses spent $1.6 billion on R&D in 2016, up $356 million (29 percent) from 2014. More>>

ALSO:

China Shopping: NZ-China FTA Upgrade Agreed Among Slew Of New Deals

New Zealand Prime Minister Bill English and China Premier Li Keqiang signed off a series of cooperation deals spanning trade, customs, travel and climate change and confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries. More>>

ALSO:

Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news