Vodafone New Zealand reached a deal to acquire 70 per cent of the rural broadband and satellite arm of operator TeamTalk for NZD10 million ($7 million).
The acquisition of TeamTalk’s Farmside subsidiary, which is subject to approval by TeamTalk’s shareholders, includes an option for Vodafone NZ to acquire the remaining 30 per cent for NZD3 million at any time in the next three years.
In a move to expand its rural coverage range of services, rival Spark in February announced plans to acquire TeamTalk for NZD0.80 cents per share, which would value the firm at about NZD22.7 million. However, TeamTalk’s board recommended shareholders reject Spark’s offer, saying it is: “without merit and not in the interests of TeamTalk shareholders”.
The operator will continue to manage Farmside under a management contract. TeamTalk, established in 1994, is New Zealand’s largest mobile radio company, with its main focus on digital trunking communication services.
TeamTalk CEO Andrew Miller said the transaction will enable a substantial reduction in debt and provides a clear path forward for Farmside: “It also enables us to strengthen our partnership with Vodafone, a significant provider to rural New Zealand.”
Miller said Farmside returned to profitability in the six months ending 31 December 2016.
A report by an independent adviser valued Farmside in the range of NZD9.6 million to NZD12.0 million, said Vodafone NZ CEO Russell Stanners: “This is an opportunity to deliver better outcomes for rural customers, to increase our presence in the rural broadband market and to utilise the skillsets of the two complementary companies.”
Stanners said there are other opportunities for partnering, for instance sharing fibre, future upgrades and maintenance.