Spark boss Simon Moutter downplays prospect of Vocus NZ acquisition TOM PULLAR-STRECKER
Last updated 13:47, February 25 2018
CHRIS SKELTON/STUFF
Spark won't use Vocus NZ's sale as an opportunity to buy back market share, managing director Simon Moutter's comments suggest.
Spark managing director Simon Moutter appears to have all but ruled out the company buying the country's third-biggest internet provider, Vocus New Zealand.
Australia-based Vocus owns the Slingshot and Orcon brands. It put its New Zealand arm on the block last year and expects to have "a fully binding sale agreement" by July.
Analyst Morningstar forecast on Wednesday that Vocus NZ could fetch A$400m. However, specialist Australian industry analyst Paul Budde has estimated A$200m would be a fairer price.
Acquiring Vocus NZ would be a means for either Spark or Vodafone to shore up their falling shares of the broadband market.
Commerce Commission figures suggest consumers have been using the switch to ultrafast broadband as an opportunity to shop around among a wider pool of suppliers.
But Moutter said making money from broadband was "extremely challenging" and indicated that acquiring the whole of Vocus NZ would be unattractive for Spark.
"We have been reasonably consistent that we have never really been looking at merger and acquisition opportunities in our game in much more than that the '$100 million territory' and that remains our focus," he said.
"We don't think taking really huge bets in particular slots of an industry category which is still really highly commoditising and stressed is the right answer. We are trying to be a bit more clever than that."
Instead, Moutter said Spark's focus was on acquiring businesses that provided "new capabilities", which had in the past led it to acquire cloud computing and data analytics firms.
Vocus NZ provides broadband to 196,000 consumers and electricity to about 12,000 homes. It also provides telecommunications services to businesses and operates a fibre-optic backhaul network.
Vodafone, 2degrees, Trustpower, Spark and several private equity firms are believed to be among 16 suitors that initially expressed interest in bidding for Vocus NZ.
There is speculation Telstra could also bid for the company as a way to re-enter the New Zealand market and get more experience in providing fibre-optic broadband to homes.
A "non-compete clause" agreed when Telstra sold TelstraClear to Vodafone in 2012 had shut it out of the New Zealand market for five years, but is believed to have expired at the end of October. BROADBAND MARKET SHARE Spark 44% (-2% points)
Vodafone 27% (-2% points)
Vocus NZ 13% (-1% point)
Trustpower 5% (+1% point)
2degrees 4% (+1% point)
Others 7% (+3% points) Source: Commerce Commission - Stuff
$A200m will be disappointing. Could be game playing by Spark.
VOC Price at posting:
$2.37 Sentiment: Hold Disclosure: Held
