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Shares rise, Sky TV drops on merger fail

NZ Newswire logoNZ Newswire 23/02/2017 Sophie Boot

New Zealand shares rose on Thursday, led by Air New Zealand and Spark while Sky Television fell to its lowest level in almost eight years after its merger with Vodafone was disallowed by the Commerce Commission.

The S&P/NZX50 Index gained 27.04 points, or 0.4 per cent, to 7,089.52. Within the index, 28 stocks rose, 14 fell and eight were unchanged. Turnover was $186.3 million.

Sky TV dropped 13 per cent to $3.78, making it the biggest decliner on the day and reaching the lowest level since June 2009. The shares tumbled when trading opened on the New Zealand stock exchange on Thursday morning, with investors wiping $293 million off the value of the pay-TV provider after the regulator rejected its proposed merger with the New Zealand operations of the global telecommunications giant, Vodafone.

"The market was erring on the side of the ComCom approving the deal, as can be seen by the sharp price reaction," said Matt Goodson, managing director at Salt Funds Management.

"It's perhaps a bit surprising the ComCom hasn't considered new entrants, which are obviously rampant in the telco media space - it'll be very interesting down the road when it comes to bidding for sports rights," he said.

"Thanks to Netflix and a lesser degree Lightbox, they are losing subscribers so it places them in a reasonably difficult position. From here, the question will be what strategies Sky TV undertakes to try to compete - do they go down some other bundled path, or do they stick purely to television?"

Spark, which opposed the merger, gained 1.2 per cent to $3.53.

Air New Zealand was the best performer, up 4.7 per cent to $2.25. It posted a 24 per cent fall in first-half pretax profit in the face of increasing competition both at home and abroad but fared better than analysts expected.

Summerset Group gained 3.1 per cent to $5.06 and Z Energy dropped 2.3 per cent to $7.16.

A2 Milk Co bounced 1.7 per cent to $2.37. It dropped 4.5 per cent on Wednesday after the milk marketer's chief executive and chair sold down their stakes.

Warehouse Group rose 1.1 per cent to $2.66. It expects to shed a net 130 jobs, or about 1.1 per cent of its workforce, in an effort to save up to $20 million a year after slimming down the structure of its retail model to try to strip out duplication.

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