In a move the pair say will create a leading integrated telecommunications and media group in New Zealand, pay-TV operator SKY and Vodafone New Zealand are to merge, with the Combined Group having the ability to offer New Zealand’s best entertainment content across all platforms and devices in a rapidly evolving media and telecommunications market.
Vodafone will become a 51 per cent shareholder in the Combined Group as a result of a consideration comprising an issue of new SKY shares and NZ$1.25 billion (£1.7bn) in cash, equivalent to an Enterprise Value of $3.437 billion
The directors of SKY unanimously recommend its shareholders to vote in favour of the resolutions to implement the proposed transaction. A SKY shareholder meeting to vote on the proposed transaction is expected to take place during early July. Approval by shareholders holding more than 75 per cent of votes cast at the meeting will be required.
Vodafone NZ is New Zealand’s leading mobile and clear number two broadband provider, with over 2.35 million mobile connections and over 500,000 fixed-line connections. SKY is New Zealand’s leading pay TV provider with over 830,000 subscribers, servicing New Zealand households with its portfolio of premium content.
SKY Chairman Peter Macourt said the merger was a transformational strategic step for the company. “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.”
SKY Chief Executive John Fellet said “This is a significant and positive step in SKY’s evolution as a premium entertainment company. We already enjoy an excellent partnership with Vodafone, bringing together our two highly complementary businesses is in the best interests of shareholders and customers. The Combined Group will offer exciting new packages with SKY’s premium entertainment content, Vodafone NZ’s communications and digital services of the future.”
Vodafone NZ Chief Executive Russell Stanners said “This is an exciting time for the rapidly evolving communications and entertainment industries. The merger brings together SKY’s leading sports and entertainment content with our extensive mobile and fixed networks, enabling customers to enjoy their favourite shows or follow their team wherever they are. The combination with SKY will bring greater choice, enhanced viewing experiences and will better serve New Zealanders as demand for packaged television, internet and telecoms services increases.”
The Combined Group will be one of the largest companies listed on the NZX Main Board. For the year ending 30 June 2017 , the Combined Group will have forecast pro-forma revenue of NZ$2,914 million, Underlying EBITDA of NZ$786 million, Underlying Operating Free Cash Flow of $467 million and Underlying Free Cash Flow of NZ$298 million prior to synergies and integration costs.
The Combined Group will continue to aggregate and offer premium content, including sports, movies, news and general entertainment and will be well positioned to meet customers’ future communications and viewing preferences by making its premium content portfolio available across devices via multiple distribution technologies, including satellite, fixed broadband (including cable and fibre), mobile and the digital delivery models of the future.
The Combined Group will have the opportunity to optimise the packaging and cross-marketing of media, entertainment and telecommunications services to create attractive packages for customers. This includes multi-play offerings combining mobile, fixed (including voice and broadband), traditional pay television and other digital content offerings (including OTT content services).
The Combined Group will participate in the opportunities created by the expansion of high speed broadband through the Government’s fibre and rural broadband initiatives, and be better placed to drive an accelerated take-up of services. New technologies are enhancing the ability of consumers to stay connected, be entertained and do business. Importantly, it will also provide SKY with a greater ability to benefit from the switch of content distribution from traditional broadcast platforms to alternative platforms including fixed and mobile broadband.
The proposed transaction meets Vodafone Group’s M&A criteria. The Combined Group will be a consolidated subsidiary of Vodafone Group going forward. Vodafone’s shares in the Combined Group will be escrowed (subject to lock-up restriction) until the Combined Group results are released for of FY2017 and there are restrictions on Vodafone increasing its interest in the Combined Group above 51 per cent.
SKY has entered into a facility agreement with the Vodafone Group for an amount up to NZ$1.8 billion to fund the cash consideration for the acquisition, transaction related costs, repay its existing debt and fund working capital requirements of the Combined Group following completion. This loan facility will be available to be drawn at completion. SKY’s Directors consider that the terms of the loan provided by Vodafone Group are attractive, but have retained the right to replace this loan if more favourable terms are available from other sources.
Following completion, the initial Board of the Combined Group will be comprised of nine directors, consisting of five directors from the existing SKY Board (being four independent directors and John Fellet as an executive director) and four directors appointed by Vodafone Group (being three directors appointed to represent Vodafone noted below and Russell Stanners as an executive director). The Chairman of SKY, Peter Macourt, will be the Chairman of the Board of the Combined Group.
Russell Stanners, currently CEO of Vodafone NZ, will be appointed CEO of the Combined Group, while John Fellet will be appointed CEO of Media and Content, reporting to Russell Stanners. Mr Stanners and Mr Fellet have already established a strong working relationship over the last decade as they have developed the existing commercial agreement and working relationships that are in place between SKY and Vodafone NZ. It is intended the remainder of the management team will be drawn from the existing teams at SKY and Vodafone NZ.
The directors appointed by Vodafone will be:
– Serpil Timuray, Regional CEO Africa, Middle East and Asia-Pacific, Vodafone Group
– John Otty, Regional CFO Africa, Middle East and Asia-Pacific, Vodafone Group
– Phil Patel, Regional Commercial Director, Africa, Middle East and Asia-Pacific, Vodafone Group
KTsat Partners with SpeedCast to provide a global broadband service to 150 vessels
KTsat and SpeedCast join forces to accelerate penetration of high speed communication services in the shipping sector in Korea
SpeedCast International Limited (ASX: SDA), a leading global satellite communications and network service provider, and KTsat, the only satellite service provider in Korea, are pleased to announce the two companies have been awarded a new contract to provide global Ku-band maritime communications services to up to 150 vessels. The service will be installed over the next 18 months.
Piers Cunningham, Vice President, Maritime Services, SpeedCast commented, “We are delighted to see the growth of our partnership with KTsat, servicing Korean shipping customers. Over the past six years, SpeedCast has been providing KTsat customers with access to our global satellite telecommunications service network, offering an uninterrupted satellite coverage along major maritime routes and offshore regions.”
“It has been a phenomenal experience to work with SpeedCast for our maritime customers. We saw a great momentum from our partnership that our KOREASAT satellite fleets in Korea and in the Asia-Pacific region have been growing over the past few years. SpeedCast has been providing an extensive infrastructure for providing this seamless connectivity for maritime data, video and voice communication services, and put in continuous effort to improve and augment the coverage, capacity and capability in its maritime communications solution,” said Shin Kyushik, CEO of KTsat.