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Opponents hail Sky-Vodafone rejection

NZ Newswire logoNZ Newswire 22/02/2017 Pattrick Smellie

Sky Television shares have been hammered, with investors wiping $293 million off its value after the competition watchdog rejected a proposed merger with telcom giant Vodafone.

Shares traded at $3.60 at 10am on Thursday morning, down 75 cents per share or 17 per cent, on Wednesday night's closing price, to hit their lowest level since mid-2009.

"This is a very disappointing conclusion to a merger we saw as enhancing New Zealand's communications and media landscape," said Sky chief executive John Fellet, who hinted it may be the end of the road for the current merger plan, despite options existing for judicial review.

Vodafone New Zealand's chief executive, Russell Stanners, also said it was disappointing.

"We are disappointed the Commerce Commission was unable to see the numerous benefits this merger brings to New Zealanders."

But a key merger opponent, Vodafone's chief rival Spark, welcomed it and challenged Sky to develop a "vibrant wholesale market" for its premium sports content"

Spark's share price rose at the open by 2 per cent to $3.56.

"The sports content market in New Zealand needs to catch up with consumer reality, as it has in many other markets around the world," said regulatory affairs manager John Wesley-Smith.

The lack of a meaningful wholesale market for Sky's sports content meant mobile and broadband providers had been held back from offering new ways to watch sports in ways that were already the norm elsewhere, he said.

"That wholesale market would not have developed at all had the merger gone ahead, but will and must develop now."

Internet NZ says the merger could have raised "network neutrality" issues that could damage competition for telephony, internet and television services.

"Kiwi consumers could have been the losers from the deal," said chief executive Jordan Carter.

"Sky and Vodafone, absent this merger, will be competitors in the ever-changing markets for communications markets."

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