Companies bow to regulatory opposition; pledge to strengthen commercial relationship.

Vodafone New Zealand and Sky Network Television on Monday abandoned their NZ$3.44 billion (€2.16 billion ) merger in the face of staunch opposition from competition regulator, the New Zealand Commerce Commission (NZCC).

The move represents a victory for incumbent Spark and altnet 2degrees, which were opposed to the tie-up.

Sky announced the decision in a brief statement in which it said "Sky and Vodafone New Zealand will continue to work together to strengthen our commercial relationship for the benefit of the customers and shareholders of our respective organisations."

It is just over a year since Sky and Vodafone New Zealand struck their merger deal. Under the planned transaction, Sky agreed to buy all of Vodafone’s shares by issuing enough new Sky shares to give Voda a 51% stake in the merged company. Voda would also have received NZ$1.15 billion in cash, funded through new debt.

The NZCC originally planned to rule on the merger by November 2016; however, concerns about a merged Sky/Vodafone’s impact on competition, plus a lobbying from rival players, led the watchdog to extend the review process until this February.

Spark in particular was very vocal in its opposition, insisting that the tie-up posed a threat to competition in the mobile and pay TV markets, given Sky’s ownership of premium sports content.

The telco successfully lobbied New Zealand’s High Court to impose a 36-hour delay to the merger in the event that it was approved. That proved unnecessary in the end though, because a day later, the NZCC blocked the deal.

Sky and Vodafone appealed the decision; that appeal has now been withdrawn.