Orcon and 2degrees announce planned merger

If it goes ahead, the new company would be the third-largest in the country behind Spark and Vodafone. Photo credit: Getty Images

Telcos Orcon and 2degrees have announced a planned merger.

If it goes ahead, the new company would be the third-largest in the country behind Spark and Vodafone.

A joint release from Orcon and 2degrees on Friday said the merger would create "an even stronger challenger in the New Zealand telecommunications market with a comprehensive service and infrastructure offering across mobile, broadband, and energy services". 

"This is an incredibly exciting day – both 2degrees and Orcon have a long heritage in the New Zealand market," said Orcon chief executive Mark Callander. "This transaction marks a step change in the New Zealand telecommunications landscape and will establish a stronger player in the market, and this will lead to more competition and benefits to end users."

Orcon is owned by Vocus, which is owned by Macquarie Asset Management and Aware Super. 2degrees is owned by Tesbrit B.V. and Trilogy International Partners.

2degrees started its mobile business in 2009 and internet in 2015, and has more than 1 million customers. Orcon has been offering internet services since the 1990s, and for the past few years has been part of Australian-based Vocus, which also owns the Slingshot, Flip and Stuff Fibre brands. 

A new entity has been created to house the merged company, Orcon and 2degrees said. 

"While we finalise the details it will remain business as usual for both teams," said 2degrees chief executive Mark Aue. "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."

They expect the merger to go ahead in the next six months, provided it gets approved. One expert told the New Zealand Herald the merger would increase competition because the new, larger company would be a more effective challenger to Spark and Vodafone. 

Orcon also has an electricity offering, and opening that up to the 2degrees customer base could spark more competition in that sector too, said AUT senior research fellow Richard Meade.