Vodafone New Zealand will take a controlling interest in Sky television under a NZ$3.44 billion ($2.44 billion) merger deal, the pay-TV operator said yesterday. The combination of New Zealand's largest subscription television service with the country's second biggest telecoms carrier was a "transformational strategic step" for the company, Sky said. "This is a significant and positive step in Sky's evolution as a premium entertainment company," chief executive John Fellet said in a statement.
"The combined group will offer exciting new packages with Sky's premium entertainment content, Vodafone NZ's communications and digital services of the future."
Sky said its board unanimously backed the proposal after an independent assessor concluded it would benefit shareholders. A Sky shareholders meeting is set to be held early next month, where the deal will need 75 percent approval to proceed. It will also need the green light from New Zealand's competition watchdog. Under the deal, Sky will buy Vodafone NZ using a combination of shares and NZ$1.25 billion in cash, which it said was "equivalent to enterprise value of NZ$3.44 billion."
However, Vodafone NZ's British parent company, Vodafone Group, will have a 51 percent stake in the combined entity. Almost half of New Zealand households have Sky subscriptions, due largely to its premium sports content, including All Blacks matches and the Olympics. But it has been under increasing pressure recently from services such as Netflix. Vodafone NZ made a NZ$121 million loss in 2014-15 but boasts the country's most mobile phone connections, providing a prime platform for distributing Sky's content. Sky documents submitted to the New Zealand stock exchange revealed the combined company would look to bundle telecom and pay-TV packages together.