Vodafone Group announced this morning it will merge its operations in New Zealand with the country’s largest paid-TV provider Sky Network Television, in a move to create “a leading integrated telecommunications and media group in New Zealand”.

Russell Stanners, chief executive of Vodafone NZ, said: “The merger brings together Sky’s leading sports and entertainment content with our extensive mobile and fixed networks, enabling customers to enjoy their favourite shows or follow their team wherever they are.”

Sky will pay NZD1.25 billion in cash, to be funded through new debt, and the rest in new Sky shares. Vodafone will end up with 51 per cent in the combined company.

Stanners will head the new business.

Sky shareholders are expected to meet in July to vote on the proposed transaction. The deal is subject to regulatory clearance, the firms said.

The new company is expected to deliver cost, capex and revenue synergies with a net present value of approximately NZD850 million.

Vodafone is the largest mobile operator in New Zealand, with a 40 per cent market share and 2.4 million customers.

The merger comes at a time when Sky faces increasing competition from online media streaming services like Netflix, which has been expanding aggressively across Asia Pacific.