Vodafone’s UK parent mulls public float of Kiwi business

Vodafone has confirmed it is considering a possible float of its New Zealand business next year.

The fact that the British-based telecommunications company was considering an initial public offering (IPO) for Vodafone NZ became an open secret in September.

However, the company confirmed this for the first time when it released its half-year results in London overnight on Tuesday.

Vodafone NZ spokeswoman Elissa Downey said Vodafone had confirmed it intended ‘‘to explore a potential IPO of Vodafone NZ during the 2018 calendar year’’.

It was important to note no final decision had been made, she said.

At one point, Vodafone was believed to have been considering getting the float completed this year. A market source has said the earliest date now might be sometime in April.

Yet to be confirmed is how much of the business it might sell to sharemarket investors, assuming it was a partial float.

Vodafone had planned to float a 49 per cent share in the New Zealand business when it was planning to merge it with Sky Network Television, but that takeover was not cleared by the Commerce Commission and has since been abandoned.

The risk of heightened price competition and declining margins in the mobile market is one factor investors may have to weigh up when considering whether to participate in the IPO, if it does proceed.

Competition concerns may be heightened by a Commerce Commission review into the mobile market which is now in its early stages. The terms of reference for the review were released last month with submissions due on November 30.

However, there is also a prospect that a reduced requirement for capital expenditure, after years of heavy investment in broadband and 4G infrastructure, could boost the profitability of the $5.2 billion telecommunications sector.

Another uncertainty is whether Vodafone or one of its competitors will successfully bid for the country’s fourth-largest telecommunications firm – Orcon and Slingshot owner Vocus NZ – which was put up for sale by its Australian owner last month.