The majority of a small telecommunications company's rural internet service will be sold to Vodafone, posing a major obstacle to Spark's takeover bid.
Photo: RNZ
Vodafone is to buy a 70 percent stake in the Farmside service for $10 million, with an option to buy the balance for $3 million in the next three years.
The rural internet service is one the main assets of TeamTalk, which also has a mobile radio network and Wellington's City Link internet network.
Team Talk this week rejected a $23 million takeover offer from Spark as inadequate and undervaluing the company, while Spark said TeamTalk's valuations were not credible.
Its chief executive Andrew Miller said the deal would strengthen the partnership with Vodafone, which would pay TeamTalk to keep running the system.
"For Team Talk, this transaction will enable a substantial reduction in debt, provides a clear path forward for Farmside, and further assists TeamTalk to consider the resumption of dividends to shareholders in calendar year 2018," Mr Miller said.
Vodafone NZ chief executive Russell Stanners said the deal would increase its presence in the rural broadband market, and improve its link with TeamTalk.
"There are other opportunities for us to partner, for instance sharing fibre including future upgrade and maintenance costs".