9 Mar 2017

Spark makes formal offer for TeamTalk

1:19 pm on 9 March 2017

The telecommunications company, Spark, has made a formal takeover offer for the struggling small market player TeamTalk.

Internet cables

TeamTalk operates Wellington's central city fibre network CityLink. Photo: 123RF

Spark is offering 80 cents per share and has reiterated what it said last month when an announcement was first made, that its offer was compelling and the best value for TeamTalk shareholders.

Spark chief financial officer David Chalmers said it should be accepted.

"This offer allows TeamTalk shareholders to achieve a price for their shares that is 78 percent higher than the last closing price before Spark issued its Notice of Intention... this is one of the highest premiums over the pre-offer market price for any code takeover on the NZX in at least the last decade," he said.

TeamTalk operates mobile radio services, Wellington's central city fibre network CityLink, and a rural sector internet service - which Spark has said would expand the range of services to its business customers.

Spark has said TeamTalk's relatively high debt level and low capitalisation would constrain its ability to invest in its network and Mr Chalmers said there were headwinds for TeamTalk.

"In particular, the UFB network has created pressure for the owners of competing fibre, including CityLink, which also needs to invest significant sums to underground portions of its Wellington fibre due to the retirement of the trolley-bus network," he said.

Last month, TeamTalk labelled the Spark offer "hostile" and said shareholders should reject it and said it was working with advisor Cameron Partners to consider options for the business.