2degrees and Orcon Group to merge

Forums › 2degrees (including Slingshot, Orcon, Flip, Stuff Fibre, MyRepublic, 2talk and Vocus) › 2degrees and Orcon Group to merge

freitasm

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#293134 31-Dec-2021 19:39

Just received.

Challenger telcos 2degrees and Orcon Group (Orcon) today announced plans to merge, forming New Zealand’s third-largest integrated telecommunications company.

The merger creates an even stronger challenger in the New Zealand telecommunications market with a comprehensive service and infrastructure offering across mobile, broadband, and energy services. The announcement follows managed funds of Macquarie Asset Management and Aware Super, as the owners of Vocus Group and its New Zealand subsidiary Orcon, signing an agreement through a newly established entity to acquire 100% of 2degrees from Trilogy International Partners Inc (Trilogy) and Tesbrit B.V.

The combined company would serve more than 1.5 million mobile customers and 345,000 fixed line customers across 1,800 mobile cell sites and 4,600 km of fibre and provide network coverage to 98.5% of the places Kiwis live and work.

“This is an incredibly exciting day – both 2degrees and Orcon have a long heritage in the New Zealand market,” said Mark Callander, Orcon CEO.

“This transaction marks a step change in the New Zealand telecommunications landscape and will establish a stronger player in market, and this will lead to more competition and benefits to end users.

“By bringing together two great Kiwi businesses with complementary assets and a shared challenger mindset, exciting growth opportunities can be realised,” added Mark Callander.

Commenting on the merger, 2degrees CEO Mark Aue said, “Combining the strengths of our respective businesses and the talents of our people will enable us to continue to innovate, enhance our product and service offering to benefit all Kiwis, and to further grow the new business.

“While we finalise the details it will remain business as usual for both teams. Our customers will continue to receive the high-quality products, service, and support they are used to, and our people will stay focused on meeting their needs. Over time, the businesses will integrate as the new company looks to offer more services to both new and existing customers,” added Mark Aue.

The acquisition is expected to complete in the first half of 2022, subject to regulatory approvals.

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#2840969 31-Dec-2021 19:51

This will be very interesting...

I guess there will be a migration for Orcon/Slingshot customers from their Spark based MVNO arrangements over to 2 Degrees. Suspect there will be better value for those customers on a 2D stack.
On the 2 Degrees side, it will be interesting if there will be any movement on their CGNAT policies... a merger may well introduce a significant bump in IP ranges.
What could be interesting is whether they migrate their "snap" broadband stack over to the Vocus stack.

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#2840970 31-Dec-2021 19:56

I suspect 2degrees broadband will get migrated to the Vocus stack, also will the 2degrees brand remain?

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#2840971 31-Dec-2021 20:00

DjShadow:
I suspect 2degrees broadband will get migrated to the Vocus stack, also will the 2degrees brand remain?

The stacks are very different- 2d use username and password authentication Vocus use ASID authentication- technically all the 2d customers could be migrated over and no one will notice

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#2840981 31-Dec-2021 20:20

That's huge.

I'm extremely curious as to what's going to happen with their agreements with Spark as they're an MVNO and they just picked up 2degrees and their entire network

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#2840995 31-Dec-2021 20:23

They'll surely drop Spark... much better to keep the $ and use in-house resources than paying an external agency for services that you already provide.

Won't happen overnight but suspect that the MVNO arrangement with Spark won't last 12 months.

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#2840998 31-Dec-2021 20:27

cokemaster:
They'll surely drop Spark... much better to keep the $ and use in-house resources than paying an external agency for services that you already provide.

Won't happen overnight but suspect that the MVNO arrangement with Spark won't last 12 months.

True but also if a customer is in an area where there is only spark and not 2degrees. This will not be a good situation to be in. It is a possibility.

The other thing I wonder is that with this acquisition and the amount of cashflow vocus actually has. I wonder if this is not only going to fill in the gaps and build more towers but also I wonder if this is going to accelerate 2d's initial rollout of 5G.

The last thing is that is vocus going to change pricing when they drop spark as an MVNO.

I've got a lot of questions really. This should not have been a surprise considering the older thread about a potential merge but it's still a shock and still huge.

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#2841004 31-Dec-2021 20:44

@MaxineN Their mobile pricing might not change but I expect their ability to offer greater value (eg. More data, more flexible plans) will increase (as well as their margins).

I sincerely doubt that they’d carry over Spark MVNO… the commercial arrangements just wouldn’t stack up for a handful of customers being left behind and 2D also permits wifi calling.

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#2841005 31-Dec-2021 20:51

I sincerely doubt that they’d carry over Spark MVNO… the commercial arrangements just wouldn’t stack up for a handful of customers being left behind and 2D also permits wifi calling.

Of course not that is very much likely going to happen but my question was that once they start migrating customers over, the handful that may not be covered by 2D(or even have compatible phones for wifi calling and we know how much of a mess that has been with devices that are not from the carrier) what's the solution, what's the tactics around this? Maybe the plan is to put more towers in to cover some of the missing areas or increase capacity so it is possible to merge pretty much everyone other.

Again, I've got a lot of questions and that's because as an ex 2d customer I'm looking into this merge and I'm hoping for big things that may just swing me back over.

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#2841007 31-Dec-2021 20:55

Moving the MVNO customers onto the 2degrees mobile network will be top priority!

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#2841012 31-Dec-2021 21:07

@Linux Agreed. That’s potentially tens or hundreds of thousands per month that they no longer need to pay Spark.

@MaxineN - I don’t think you’ll see sites stood up specifically as a result of this. If the merger results in more RF, you could see this farmed out to existing sites. Potentially they might increase their sites as a result of more customers joining but I believe the cell site provisioning will be done on a capacity-commercial basis.

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#2841014 31-Dec-2021 21:08

Given the 2degrees brand on Canstar Blue rates higher than Slingshot and Orcon it would make sense to retain the brand and perhaps move Slingshot, Flip and Orcon over but run it off their current Vocus stack

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#2841015 31-Dec-2021 21:13

2degrees been good on mobile for my personal and work mobiles. Still contemplating moving from voyager at work...

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#2841047 31-Dec-2021 22:08

Interesting, didn't expect that to happen. Last I heard was Vocus was up for sale. Will it be like when TCL was purchased by Vodafone, and they gradually got rid of all the RSP e-mail addresses?

I guess we'll just have to wait and see.

Also I would expect the Spark MNVO deal to be dropped as quickly as possible, it may even finish before the end of the contract.

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#2841052 31-Dec-2021 22:26

Will be interesting whether they consolidate or keep the multi brand strategy.
Personally pick that they’ll do a two tier approach.

Eg.
Slingshot for the entry level (aka Skinny)
Orcon for the premium brand (aka Spark)

With 2D taking over one of the two.

There are also some interesting white label opportunities- eg. Sky Mobile?

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#2841054 31-Dec-2021 22:44

@cokemaster

Will be interesting to see if they retain the current MVNO deal with warehouse mobile.

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