Vodafone is grabbing control of Sky TV New Zealand in a $3 billion deal

Members of Rongotai College peform the Haka for the All Blacks in Wellington. Mark Tantrum/Getty Images

The UK phone group Vodafone is taking control of leading cable TV operator Sky in New Zealand in a deal which would create a company valued at $NZ3.4 billion ($A3.2 million).

The deal sees Sky acquiring all of the shares in Vodafone NZ for $NZ3.4 billion through the issue of new shares and $NZ1.25 billion in cash. Vodafone Europe would end up with a 51% interest and Sky shareholders a minority 49%.

Revenue in the merged company would be $NZ2.914 billion ($A2.76 billion). The players see “significant potential” for cross-marketing and synergies between content (Sky) and platform (Vodafone).

Video content is a significant driver of data consumption on mobile networks, as this chart shows:

Source: Sky NZ

Sky Network is also listed on the ASX. Its shares last traded at $4.15.

“The merger with Vodafone is a transformational strategic step for our company,” says Sky chairman Peter Macourt, a former CFO of News Corp in Australia, which used to control the company. News in 2014 sold its 44% stake in Sky for about $700 million to institutional investors.

“The transaction is also highly attractive to our shareholders. Our shares are being issued at a premium to market price and shareholders also participate in the substantial synergy benefits we expect from the transaction.”

He says the combined company will offer new packages with Sky’s premium entertainment content and Vodafone’s communications and digital services.

Vodafone NZ CEO Russell Stanners will be the new head of the combined group.

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