Spark NZ launches formal takeover offer for TeamTalk

Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand


MARKET RELEASE
9 March 2017

Spark New Zealand launches formal takeover offer of
NZ$0.80 per share to TeamTalk shareholders

Spark New Zealand confirmed today it is making a formal offer to TeamTalk
shareholders to acquire 100% of their TeamTalk shares at a price of NZ$0.80
per share.
Spark’s Chief Financial Officer, David Chalmers, said, “We strongly believe this
offer is in the best interests of TeamTalk shareholders, many of whom have seen
the value of their investment in TeamTalk relentlessly decline over recent years.
“This offer allows TeamTalk shareholders to achieve a price for their shares that
is 78% higher than the last closing price before Spark issued its Notice of
Intention, and an 82% premium on a three-month volume weighted average
price basis. 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.
“So we are somewhat surprised that, given extensive efforts to engage in good
faith with the TeamTalk Board, they have been dismissive of Spark’s interest and
the opportunity to unlock value for their shareholders. TeamTalk agreed to
provide Spark with limited due diligence, but much of the information that was
requested was never delivered and what was provided was of little substance.
“The TeamTalk Board has suggested there may be significant value in the
business above Spark’s offer price, based on the promise of a new strategic
business plan. We have yet to see any concrete evidence of such a plan, or
receive a summary or copy of it from the TeamTalk Board.
We also note no other proposals for a partial or full sale of TeamTalk have been
put to shareholders at any time in the nine months Spark has been attempting to
engage with TeamTalk, and there is no sign that any such offers will eventuate.
“Spark’s offer provides significantly greater and more immediate certainty than
the alternatives advocated by the TeamTalk Board, such as holding shares in the

Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand


belief that performance may significantly improve, or a series of possible sales
based on a potential break-up of TeamTalk assets.
“The New Zealand telecommunications market continues to change rapidly, and
as a result TeamTalk faces many headwinds. 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.
“Farmside is competing in an intensely competitive broadband market, and the
extension of rural communication networks has reduced the market for niche
satellite services. The increasing coverage and performance of mobile networks
is also challenging the role of mobile radio networks, a core element of
TeamTalk’s business.
“For TeamTalk, the cumulative impact of these challenges has resulted in a
series of earnings downgrades as margins have come under increasing
pressure. This was highlighted in TeamTalk’s first half result for FY17. Despite
attempts to characterise the result as pleasing, revenue and underlying net
profits before tax
1
were down on the first half result for FY16. The TeamTalk
Board has also indicated the need to fund significant capital requirements across
TeamTalk in the coming years at a time when the company’s debt facilities are
being reduced.
“With all these factors in mind, we simply do not believe TeamTalk can deliver a
better outcome for its shareholders than Spark’s offer.”
The full details of the Spark offer are available at investors.sparknz.co.nz

- ENDS –

For media queries, please contact:
Richard Llewellyn
Head of Corporate Communications +64 (0) 27 523 2362

1
Reported profit and earnings per share includes realised and non-realised gains/(losses) on the fair value of
TeamTalk’s finance derivatives. These movements are driven by changes in interest rates and not operating
performance. Removal of these in both periods (a $451k gain in 1H17 and a loss of $75k in 1H16) meant Net Profit
Before Tax was down 16.6% between 1H17 and 1H16.

Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand



For investor relations queries, please contact:
Dean Werder
General Manager Finance and Business Performance +64 (0) 27 259 7176