NZ's PowerTel acquisition to shake up local telco market

NZ's PowerTel acquisition to shake up local telco market

Telecom New Zealand's acquisition of ASX-listed data carrier, PowerTel, shows the telco has Telstra's SMB and consumer products in its sights, according to an industry analyst.

IDC senior telecommunications analyst, David Cannon, said the plan was good news for both the business and the local market.

"Here's a big hip-hip hooray that something positive has been done for AAPT," he said. "PowerTel has rolled out a great infrastructure and wholesale business model that provides alternative data access to Telstra."

Cannon said PowerTel's infrastructure bolted onto AAPT's internal systems would be a force to be reckoned with.

"Once it sorts out its own backyard, it will be putting out very competitive business models for the SMB market," he said. "It will also be able to offer extremely competitive ADSL2+ to the consumer market."

Canon likened the new entity to be a return to the AAPT of a decade ago, which surprised the local market with cheap long distance calls. This time, however, the surprise would come through SMB and consumer services.

Telecom NZ reached an agreement to acquire 100 per cent of PowerTel last week for $357 million, or $2.30 per share.

It will be funded by a combination of cash and existing debt facilities. Telecom has also entered into an option agreement to acquire 10 per cent of PowerTel's shares on issue from its major shareholder, TVG.

CFO, Marko Bogoievski, said the transaction brought together two "strongly complementary" businesses and was a step towards the consolidation of Australia's telecommunications industry.

"It provides significant benefits to Telecom [New Zealand] by enabling AAPT to leverage its investment in service capability and it gives us the scope over time to bring more of our customers onto the combined access network rather than servicing them through wholesale arrangements," he said. "This is a very positive step for the development of our Australian business."

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