Vocus sale could start telco bids

Spark has not ruled out bidding for Vocus New Zealand, the country’s fourth largest telecommunications company, which will be put on the market by its Australian owner.

Vocus NZ has 192,000 broadband customers. It owns the Slingshot, Orcon and CallPlus brands as well as network company FX, supplies electricity to about 9000 homes and businesses, and resells a mobile service to 21,000 people.

Spark spokesman Andrew Pirie said the company would ‘‘as always be interested in any opportunity that is value enhancing for our shareholders and customers’’.

‘‘We’ve noted the Vocus announcement but at this stage we don’t have any further comment.’’

However, Telecommunications Users Association chief executive Craig Young said it would be concerned if either Spark or Vodafone were allowed to buy Vocus’ New Zealand retail businesses.

‘‘As the third-largest fixed-line competitor in New Zealand it’s important to our market that [Vocus] remains strong, competitive and independent from at least the two big players in the market,’’ he said.

Vodafone and 2degrees both said they had no comment.

Spark chief executive Simon Moutter forecast in August that ‘‘something will have to give’’ in the broadband market because of intense competition, rising wholesale costs and low margins.

That warning came days after Vocus wrote $215 million off the book value of its New Zealand business.

Vocus said in a statement to the Australian stock exchange on Monday that it aimed to sell its New Zealand arm by the end of June to reduce company debt, and was finalising the appointment of advisers to prepare the sale.

Vocus NZ chief executive Mark Callander said the move was ‘‘just another step in the journey’’ for the business.

‘‘The New Zealand team have been through these processes before and they won’t be fazed by the sale,’’ he said.

Changes of ownership are nothing new to many Vocus NZ customers.

Vocus NZ’s flagship internet brand, Orcon, was established as a private business by Auckland entrepreneur Seeby Woodhouse, before being bought by stateowned enterprise Kordia for $24m in 2007 and then on-sold to private buyers in 2013.

It was acquired by CallPlus the following year, before CallPlus was bought for $250m in 2015 by Australian listed telecommunications firm M2, which was subsequently acquired by Vocus.

However, Vocus has seen its market value slashed over the past year, in part following a decision in April by TPG Telecom to set up a fourth mobile network in Australia.

Vocus NZ posted an operating profit of A$58 million (NZ$65m) on revenues of A$373m in the year to June 30 and is forecasting ‘‘single digit’’ revenue and operatingprofit growth this year.

The company has been seeking rule changes in New Zealand to help it compete more profitably in the mobile market.