The big business news yesterday was that Vodafone had put in an offer to buy TelstraClear for $840 million in an effort to better compete with Telecom in the corporate and fixed line space. There’s plenty of water to go under the bridge before anything is approved and, as you’d hope with a deal of this size (and with a restraint of trade clause written into the contract for Telstra), the decision is expected to take a few months. So if it does go ahead, what will that mean for TelstraClear’s existing agency partners?
The Commerce Commission doesn’t allow the acquirer to deal with the acquired during the approval process, so the two entities will be operating separately as they always have until a decision is made. So, not surprisingly, no-one’s saying too much other than towing the party line.
Marketing manager Luke Patterson didn’t want to comment when asked whether Assignment Group should be worried about losing its foundation client and passed our enquiries onto communications guy Gary Bowering (read TelstraClear’s full release here).
“[Chief executive] Dr Alan Freeth says the sale is contingent on the approval of the New Zealand Commerce Commission, the Ministry of Business, Innovation and Employment, and the Overseas Investment Office. This is expected to take some months.”
But the announcement, he says, will “not change the quality products and services TelstraClear provides”.
“It will be business as usual for all of our customers and partners.”
Of course, given Vodafone chief executive Russell Stanners has said there would be some axing of back room staff if the deal goes through, it’s fair to assume some efficiencies will also be sought in terms of marketing and communications. It seems doubtful it would keep the two brands, especially as the Vodafone brand is much stronger (despite a series of fines for misleading advertising), so that could bode well for its newish agency DraftFCB.
UPDATE: A Vodafone spokesperson told the NBR the “TelstraClear brand would be removed from the market over an 18 month period”, subject to regulatory approvals.
But there are a whole number of ways it could slice the new business if it gets the go ahead (fixed line and mobile, or consumer and business, for example) and it might require some specific comms capabilities in certain sectors TelstraClear was strong in, so all hope is certainly not lost for Assignment Group. And, something that might work in its favour is the fact that through STW it is linked to the WPP network, which is globally aligned with Vodafone.
With mergers like this, it’s always interesting to see how loyalty is accommodated under a new structure, whether that be for customers or partners. So while things are expected to be fairly quiet on the western front in the next few months, it will be very interesting to see how it all pans out.
Here’s the Vodafone release:
Vodafone New Zealand today announces that it has entered into an agreement to acquire TelstraClear Limited (“TelstraClear”), the New Zealand business of Telstra Corporation, for a cash consideration of NZ$840 million.
The transaction is expected to complete in the fourth calendar quarter of 2012, subject to approval from the New Zealand Commerce Commission, the Ministry of Business, Innovation and Employment and the Overseas Investment Office.
The acquisition of TelstraClear will strengthen Vodafone’s portfolio of fixed communications solutions, particularly with business customers, and complement Vodafone’s existing mobile offerings. Combined, this will allow Vodafone to meet the total communications needs of its customers.
Vodafone New Zealand Chief Executive, Russell Stanners, said the acquisition gives Vodafone a compelling set of products and capabilities for consumers and businesses, which will allow the company to innovate and grow, particularly as fibre rolls out across New Zealand.
“We are delighted with the opportunity to acquire TelstraClear, a company with an outstanding portfolio of fixed solutions supported by an experienced team. The two businesses are very complementary and, when combined, will enhance our ability to meet the communications needs of customers from the Far North to Southland.
“The transaction is expected to create significant cost and capex savings from a combination of the two companies’ networks, commercial operations and administrative functions. If approved, it will create a new force in the New Zealand market in readiness for the ultra-fast broadband roll out, providing customers with a full suite of fixed and mobile telecommunications products.”
Stanners says Vodafone is committed to continuing to deliver a great customer experience to Vodafone and TelstraClear customers.
“We are excited by the opportunity to work with the TelstraClear team to deliver an unmatched customer experience and are committed to building on our regional presence – particularly in Christchurch – as part of our overall commitment to the region’s rebuild.”