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Spark wants to gobble up TeamTalk

NZ Newswire logoNZ Newswire 6/02/2017 Paul McBeth

Spark says its proposed $22.7 million offer for ailing network minnow TeamTalk, amounting to a 78 per cent premium for the shares, will give the country's biggest telecommunications group ownership of fibre in Wellington and a wireless rural internet service provider.

Spark will pay TeamTalk investors 80 cents per share in a full takeover, a premium to the 45 cents price the stock last traded at.

Spark wants to integrate TeamTalk's services into the larger group, cutting costs by stripping out any duplication and reviewing the business to see what parts of the Wellington-based network can be grown and whether any units should be divested.

"We believe this is a compelling offer, at a significant premium to the current TeamTalk share price, which is unlikely to be achieved by other means," Spark chief executive Simon Moutter said in a statement.

"The reality is TeamTalk shares have significantly underperformed relative to the New Zealand market over the last three years."

The looming offer follows TeamTalk's review of operations after the company struggled to integrate the rural ISP Farmside business, acquired in late 2012 for $42m, which left it with higher debt and flat earnings.

Spark filed its notice of intention to launch the takeover and will need Overseas Investment Office and Commerce Commission approval to proceed.

The larger telco stressed the challenges TeamTalk faced from increased competition to its rural ISP due to the government's rural broadband initiative and the capital needs to upgrade its Wellington CityLink fibre network.

Spark has previously signalled a desire to reduce its reliance on network operator Chorus's regulated copper lines and last year talked up the opportunities wireless broadband offers to grow the budget end of the market.

Shares of Spark last traded at $3.58 and have gained 13 per cent over the past 12 months.

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