Infratil's share price dived more than five per cent by 12:30 today on news it had sealed a deal to buy Vodafone NZ.
The $3.4 deal, in partnership with Canadian investor Brookfield, may still face regulatory hurdles and Infratil outlined its options to the shareholders should the Commerce Commission or Overseas Investment Office object.
It also raises potential questions about the future of Trustpower's deal with Spark to resell Spark's mobile and wireless services because Infratil is also the majority owner of that company.
Trustpower CEO Vince Hawkesworth told Reseller News there were no issues around that deal from Trustpower's point of view and it was "business as usual".
"We have a relationship with Spark and we expect to execute on that," he said. "Ultimately Trustpower's board is responsible for what Trustpower does."
Conditions including regulatory clearances must be satisfied within eight months of signing, but Infratil said it anticipates that all conditions will be satisfied by August, and completion will occur by 31 August.
"Given the competitive nature of the fixed broadband market, Infratil believes there is a very strong basis for Commerce Commission clearance to be granted," it said.
"If Infratil cannot obtain Commerce Commission clearance, the acquisition agreement would require Infratil to divest its interest in the Vodafone transaction, or failing that divest its stake in Trustpower by the eight-month deadline.
"The Commerce Commission clearance condition could also be satisfied if Trustpower had sold its retail business in the required time. Trustpower will remain free to pursue its successful multi-utility retail strategy."
The Vodafone NZ acquisition was consistent with Infratil's plan to reshape its portfolio and maintain a balanced growth profile, Infratil CEO Marko Bogoievski said.
"It also significantly increases our exposure to high conviction trends surrounding data and the infrastructure required to deliver future communication models."
Bogoievski is no stranger to the telecommunications game, having spent several years as the chief financial officer of Telecom NZ, now Spark, before shifting to Infratil.
"Vodafone NZ has been rigorously assessed over the past several months," he said. "We have done an extensive amount of work to ensure we understand the opportunities available to the business, in particular, the ability to use next generation 5G technology to significantly enhance network capability and future services to Vodafone NZ customers.
"We expect that this acquisition will create strong, long-term value for Infratil shareholders."
The $3.4 billion purchase price is to be funded via a $1.03 million equity contribution from each of Infratil and Brookfield, with the balance funded from Vodafone NZ debt with a portion of equity reserved for the Vodafone NZ executive team.
Infratil's equity contribution is expected to be funded via a fully underwritten equity raising of up to $400 million, with the remainder to be funded through a combination of $400 million of debt.
A significant proportion of any equity raising is expected to be directed towards existing shareholders.