Speculation is mounting that UBS is in the box seat to defend Vodafone New Zealand from an attempted takeover by TPG Telecom.
Apparently, Peter Nelson, who used to work at Vodafone, is widely expected to secure the mandate — if he has not already been locked in by the mobile phone services provider.
However, the investment bank has not confirmed that it has an advisory role.
New Zealand’s telecommunications market is dominated by Telecom New Zealand and Vodafone, while 2degrees Mobile is the smaller third player, and the drums are beating that a move by TPG Telecom on Vodafone New Zealand is increasingly likely.
Some believe 2degrees Mobile could also be an acquisition target of Australia’s recently merger between Vocus and M2, despite chequered performance.
Goldman Sachs is close to M2, while Vocus has used Credit Suisse, which partners with First New Zealand Capital across the Tasman.
Formed in 1998 after Vodafone purchased BellSouth’s New Zealand operations, Vodafone New Zealand has invested millions of dollars in its 3G network and has New Zealand’s first 4G Long Term Evolution network.
It is a subsidiary of Vodafone, based in London, and is New Zealand’s largest mobile phone operator.
The 2012 acquisition of TelstraClear made it New Zealand’s second-largest internet services provider.
Recently, the expectation has been that the business would be worth about $NZ1bn, and the reason for TPG embarking on a deal is its appetite to expand into the mobile market.
Taking on Vodafone across the Tasman could offer a trial run for the company, which usually drafts in Macquarie Capital as its adviser, before embarking on the move in Australia.
It comes at a time that TPG is likely to face pressure on its earning margins with the rollout of the National Broadband network. Adding to the logic is that TPG Telecom is known for its strong management team, led by David Teoh, and is thought to be in a position to employ a far more efficient structure to the Vodafone New Zealand business.
Vodafone and TPG already have a close connection.
In September last year, Vodafone Hutchison Australia and TPG Telecom announced a tie-up in which TPG would provide Dark Fibre and network services to more than 3000 Vodafone Australia sites over a 15-year term.
The move was seen by some at the time as a potential precursor to a takeover by TPG Telecom of CK Hutchinson’s stake in Vodafone’s Australian subsidiary, or the business as a whole.
IT industry analysts have suspected that TPG would make a play for Vodafone because strong synergies exist between Vodafone’s telecommunication towers and the fibre networks of TPG and its recently acquired iiNet.
A merger between the two would create a strong competitor to Telstra and Optus, with compelling offerings in both the mobile and fixed-line markets and substantial cross-selling opportunities to TPG’s large broadband subscriber base and Vodafone’s mobile customers.
Some estimate that an acquisition of Vodafone could cost TPG about $4 billion, just under half its own market value.
CK Hutchinson sits within the empire of Li Ka Shing’s Cheung Kong Holdings and there was speculation last year that the Hong Kong billionaire was interested in selling parts of his empire.
HTA Price at posting:
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