Business

Commerce Commission approves 2degrees Vocus merger

12:22 pm on 15 March 2022

The merger of telecommunications companies 2degrees and Vocus has cleared a major hurdle with the Commerce Commission giving its blessing.

Photo: RNZ / Alexander Robertson / Supplied

The competition regulator has given clearance for the merger, which will create the country's third-biggest telco joining 2degrees and the Vocus brands - Orcon, Slingshot, and Stuff Fibre.

Deputy Commission Chair Sue Begg said the Commission was satisfied that the merger was unlikely to substantially lessen competition in any New Zealand market.

"The focus of our enquiries was on wholesale and retail competition in broadband and fixed voice and mobile services. The evidence before us indicates that the merged entity will continue to face strong competition from existing competitors, including Spark and Vodafone."

"While the transaction will result in the vertical integration of 2degrees' mobile network with the largest mobile virtual network operator (MVNO), Vocus, we do not consider the transaction will significantly change the incentives of network operators to grant access to MVNOs," she said.

The enlarged company, which will be owned by Australian fund managers Macquarie Asset Management and Aware Super, will be known as 2degrees because of its established brand and reputation.

Orcon chief executive Mark Callander will head the new company.

"This outcome recognises that the merger will enhance competition and provide benefits to Kiwis and Kiwi businesses. The combined offering of Orcon and 2degrees positions the business as a strong third player in the New Zealand telecommunications industry," he said.

The new company will have revenue of about $2 billion, with just under 1800 staff, and nearly 1.9 million mobile and broadband customers.