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A successful float of New Zealand’s third-largest telco could accelerate its investment in 5G.
2degrees has begun testing investors’ appetite for its planned listing on the NZX and Australia’s ASX.
A company spokesman said 2degrees had held 16 meetings with potential institutional investors in New Zealand over the past week or two and it planned to hold a similar “roadshow” in Australia next week.
Majority-owner Trilogy International Partners announced in March that it planned to float a part of its stake in New Zealand’s third-largest telco either late this year or early next year.
Market conditions appear to be tracking favourably for an IPO at the moment, with the NZX Top 50 index down 6 per cent on its January high, but still up on its average over the past year.
* 2degrees to build ‘almost brand new network’ with Ericsson to get into 5G
* 2degrees says listing on NZX could ‘accelerate growth’ ahead of 5G launch
* Vocus NZ ‘IPO’ may still go ahead after parent’s $3.7b sale
The Australian Financial Review reported that Jarden, Macquarie and Craigs Investment Partners had been “ushering 2degrees around the market”.
The purpose was to introduce the company to fund managers, so management could explain the business and its place in the New Zealand telco sector, it said.
The AFR reported not all prospective investors were impressed, with some concerned about 2degrees’ ability to pay planned dividends from its cash flows.
But 2degrees’ spokesman questioned that information.
2degrees had not shared any forward-looking financial information with potential investors at the meetings, including what its dividend policy would be, so it was not clear where that comment had come from, he said.
2degrees chief executive Mark Aue said in March that Trilogy, which is listed in Toronto, Canada, would be looking to cash up some of its 73 per cent stake in 2degrees to pay down debt.
But he said Trilogy’s intention would be to retain a “significant” stake in the firm.
Funds from the IPO could also help 2degrees accelerate its investment in 5G after it made a significant decision in April to invest in what is essentially a new mobile network that will be built by Sweden’s Ericsson.
A tentative proposal to list New Zealand’s fourth-largest telco, Orcon and Slingshot owner Vocus NZ, on the NZX was taken off pause last month following the completion of the sale of its Australian parent to Macquarie.
Vocus NZ had 226,000 broadband customers last year and employs about 600 staff.
Vocus NZ chief executive Mark Callander said last week that it had decided the time was right to consider options for the New Zealand business “one of which may be an IPO”.
“While we have appointed advisors to help us with this decision, it is still very early in the process,” he said.