TelstraClear sale imminent: report

Regulatory scrutiny likely.

Telstra is set to sell its New Zealand subsidiary TelstraClear to Vodafone NZ, according to reports.

Business Day reported overnight that a deal could be struck within weeks, with the sale to be announced sometime next month.

The price is thought to be in the $340-$400 million range, according to analysts.

The New Zealand subsidiary has performed badly for Telstra, suffering retained losses of $422.43 million on a total investment of $1.14 billion.

The company is the second-largest internet provider and telco in the country, and retains 1300 staff and 700 contractors. Many are likely to be affected by the deal.

Vodafone is thought to be eyeing TelstraClear’s national fibre backbone networks as well as its radio frequency spectrum holdings, which could be used to more easily deploy an LTE wireless network.

Despite reports of Telstra only selling the consumer business, the telco is expected to sell the company as a whole.

A stumbling block to the deal could be New Zealand commerce regulations that state a merger creating an entity with less than 20 percent market share is unlikely to lessen competition, in a market where the biggest three players have more than 70 percent share.

The merged Vodafone and TelstraClear entity would create a company that has almost a third of the market, behind Telecom New Zealand, which owns 50 percent. The deal is therefore likely to be scrutinised by the regulator, the Commerce Commission.