TeamTalk, the Wellington-based telecommunications minnow, has sold its remaining 30 percent stake in rural broadband division Farmside to Vodafone New Zealand for $3 million, after the country's biggest mobile operator exercised an option to mop up the rest of the business.
TeamTalk received $13 million from the sale of BayCity Communications, trading as Farmside, having initially sold a 70 percent interest to Vodafone last year. That was a premium to the $9.6 million-to-$12 million range placed on the unit in the independent adviser's report by Grant Samuel, although TeamTalk paid $31 million in cash and scrip upfront for the company in 2012.
Vodafone's full takeover of the rural internet business comes as the government accelerates public investment in the nation's telecommunications network, extending the fibre network to more provincial areas and filling in mobile 'black spots' where there's no coverage.
"This agreement consolidates TeamTalk’s business," TeamTalk chief executive Andrew Miller said in a statement. "It enables us to focus on our key priorities: rolling out our national digital Tier III network and undergrounding our fibre network in Wellington’s CBD, to deliver greater resiliency and additional services to customers."
TeamTalk returned to profit in 2017 after selling the Farmside stake, using the funds to shore up its balance sheet by repaying debt, and giving the board confidence of resuming dividends this year.
The deal is expected to be completed at the end of the month, and Vodafone said it doesn't plan to make any major changes to Farmside, keeping staff and operations based in the South Island city of Timaru.
"Rural communities are important to us and this investment further deepens Vodafone’s long-standing commitment to them," chief executive Russell Stanners said. "With Farmside now firmly part of the Vodafone whānau, we can continue to deliver better outcomes for these communities and increase our presence in the rural broadband market."
Vodafone and TeamTalk plan to work together where they see appropriate strategic opportunities, they said.
TeamTalk shares last traded at 90 cents and have gained 18 percent over the past 12 months.