Orcon purchase 'speculation', Sky

TOM PULLAR-STRECKER
Last updated 08:19 16/06/2014
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Sky Television is refusing to comment on whether it is negotiating to take over internet provider Orcon.

However, discussion on the possible ramifications of such a deal has been growing.

Sky TV spokeswoman Kirsty Way said the pay-television provider "didn't comment on market speculation" after a report was published on Saturday that said there were signs Sky would buy the company.

Sky's British counterpart BSkyB shook up the internet market in Britain recently when it began offering its pay-television subscribers two year's free unlimited broadband.

Orcon is New Zealand's fourth-largest internet provider and has been on the block since March. It is understood it is likely to sell in the next few days for about $30 million.

Xero chief executive Rod Drury said he found the idea that Sky TV would buy Orcon both credible and upsetting.

"In the perfect world content and network delivery should be separated", he said.

"This would be going the wrong way."

Labour communications spokeswoman Clare Curran said a takeover by Sky would pose interesting questions for the Commerce Commission.

Not all are convinced Sky is in the frame.

Paymark chief executive Mark Rushworth, a former boss of internet provider Ihug with connections to the industry, said it was not going to happen.

"Sky doesn't need a network in a UFB [ultrafast broadband] fibre world," he tweeted.

An internet industry source said 2degrees had weighed up buying Orcon to get into the fixed-line market but had pulled back, while he assumed other internet providers, including CallPlus, would be interested at a price of less than $30m.

Trustpower, which has been quietly growing its broadband business, did not rule out in May making a bid for Orcon or other acquisitions. But its telecommunications business head, Peter Gregory, said vendors had to be "realistic" about the price they were asking.

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