Vodafone NZ pays NZ$3m for remaining stake in rural ISP

TeamTalk to consolidate its business following sale

TeamTalk has sold its remaining 30% stake in BayCity Communications, a rural New Zealand ISP and telecommunications provider through its Farmside operation, to Vodafone NZ for NZ$3 million. Last year Vodafone acquired 70% of the company from TeamTalk for $10 million in cash.

“This agreement consolidates TeamTalk’s business. It enables us to focus on our key priorities: rolling out our National Digital Tier III Network and undergrounding our Fibre Network in Wellington’s CBD, to deliver greater resiliency and additional services to customers,” TeamTalk CEO Andrew Miller says.

TeamTalk originally acquired Bay City Communications in 2012, for an upfront purchase price of $31 million, with an earn out based on company performance over the next two financial years, which potentially raised the total price paid to $42.05 million.

The ownership change takes effect on 1 June 2018, and Vodafone says it has no plans to make major changes to Farmside at this time. Staff and operations will continue to be based in Timaru.

Vodafone NZ CEO Russell Stanners says acquiring 100% of BayCity Communications signals its deep commitment to the rural broadband market. Vodafone has previously partnered with Chorus to deliver the Rural Broadband Initiative and it has now joined with Spark and 2degrees to form the Rural Connectivity Group for the delivery of the second phase of the Initiative, RBI2.

The rural broadband scene is becoming a highly contested segment of the telecommunications market with large players such as Vodafone competing with small rural providers known as Wireless Internet Service Providers (WISPs). The WISPs have banded together to form a united group, with some of its members also being awarded funding to roll out RBI2.

Meanwhile, Vodafone NZ has itself been the subject of change of ownership speculation, after its move to merge with SkyTV and publicly list was declined by the Commerce Commission last year.

While Stanners told the NBR in April that an IPO was not on the table, the intention to list popped up in the Vodafone Group’s Annual Result announcement this week: “In New Zealand, service revenue declined 0.5%, with growth in mobile offset by pressure in fixed. We continue to explore a potential IPO of Vodafone New Zealand.” Vodafone Group results also recorded that Vodafone NZ ended the financial year with 2,560,000 mobile customers (of which 41.3% are on contract), and 426,000 fixed broadband customers.

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