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Sky TV, Vodafone play down merger threat

NZ NewswireNZ Newswire 30/06/2016 Paul McBeth

Sky Network Television and Vodafone New Zealand are playing down the threat to competition posed by their proposed multi-billion dollar merger.

In their application to the Commerce Commission seeking clearance for their coupling, Sky and Vodafone say there's no meaningful overlap in the services they each offer.

It says there are an increasing number of online video competitors and intense rivalry among telecommunications providers.

Those constraints mean a combined Sky and Vodafone won't be able to pull any wholesale content services, which it doesn't plan to do, and couldn't reduce competition in the markets.

"The combined group will face strong and growing competition across pay-TV, premium content, and telecommunications markets," the application said.

"Consumers' viewing behaviours and the relevant markets are changing rapidly, and consumers' expectations of their telecommunications and pay-TV providers are ever increasing."

Shareholders will vote at a meeting in Auckland on July 6 on the merger proposal, which would see Sky TV acquire Vodafone NZ for $3.44 billion through the issue of new shares.

It will give Vodafone Europe a 51 per cent share in the combined group, and cash of $1.25b. Sky plans to borrow $1.8b from Vodafone to fund the purchase, repay its existing debt and fund the working capital needs of the group after the merger.

The application says Vodafone's reason for pursuing the merger is to meet converging communications and broadcasting markets, chasing cross-marketing opportunities in an expanded offering and using Sky's content to drive broadband usage.

For Sky, the deal puts it in a stronger position to fend off online offerings that have gained traction with consumers.

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