The Commerce Commission has granted clearance for One New Zealand Group Limited to acquire 100% of the shares in Dense Air New Zealand Limited from Dense Air Limited and SoftBank Corp.
Dense Air owns the management rights to 2 x 35MHz radio spectrum in the 2600MHz band. Radio spectrum is an input used by One NZ and other parties in mobile telecommunications networks.
In reaching its decision, the Commission considered the potential impact of the proposed acquisition on competition in wholesale and retail telecommunications markets in New Zealand.
Chair Dr John Small said the Commission was satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.
"Based on the evidence before us, we are satisfied that One NZ acquiring Dense Air's spectrum is unlikely to substantially lessen competition in telecommunications products and services compared with the counterfactual. Post-acquisition, One NZ would continue to face significant competition from other retail mobile and broadband providers."
The Commission conducted its assessment based on a counterfactual where 2degrees acquires Dense Air's spectrum.
"We do not consider that the acquisition is likely to substantially affect 2degrees' competitive effectiveness. While the acquisition means that it will not have any spectrum in the 2600Mhz band, it has access to other spectrum in the mid-band that it can deploy."
"In addition, 2degrees has options to expand the capacity of its network by deploying its existing spectrum at more sites and/or by improving spectral efficiency."
"We also note that there will be opportunities to acquire more spectrum in the future, including when the 2600MHz spectrum management rights expire in 2028. The award of new rights will be subject to the merger control provisions of the Commerce Act," Dr Small said.
A public version of the written reasons for the decision will be available on the Commission's case register in due course.
Background
Radio spectrum is an input used in mobile telecommunications networks. Different spectrum bands have different characteristics or properties that may make them suitable for different purposes. Low frequency spectrum (eg, sub-1GHz) transmits signals over long distances, so is best suited to providing coverage in rural areas and assists in providing greater indoor penetration in urban areas. Mid-band spectrum (between 1GHz and 6GHz, including 2600MHz) offers greater capacity, but over shorter distances, so is useful to provide capacity and carry signals in densely populated urban areas using a large number of sites. 2600MHz spectrum is currently used by One NZ and Spark to provide 4G mobile and wireless broadband services, and may be used for 5G and 6G services in the future, together with other mid and other spectrum bands.
We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.
