British mobile phone operator Vodafone Ltd received the green light on Tuesday for the NZ$840 million (429 million pounds) takeover of Australian telecom operator Telstra's struggling New Zealand operations, heating up competition in the country's stalled market.
New Zealand's competition regulator approved Vodafone's move to acquire TelstraClear's fixed-line and Internet operations, giving Vodafone more muscle to take on Telecom New Zealand , which dominates the sector.
The Commerce Commission said it looked at the potential impact of the purchase in a number of markets, including fixed line calling and broadband services to residential, as well as business customers.
It also assessed whether the acquisition would lead to a substantial lessening of competition.
"The commission is satisfied that the proposed acquisition would be unlikely to substantially lessen competition in any of the relevant markets," Commerce Commission chair Mark Berry said in a statement.
Shares in Telstra finished at A$4.07 on Monday.
The takeover will combine Vodafone's mobile network with TelstraClear's fixed-line phone and broadband operations, giving it a near 30 percent market share, closing the gap with Telecom, which controls just over half of the market.
It will also see the New Zealand telecommunications market dominated by two companies, offering a full range of mobile, fixed-line, and internet services, possibly putting pressure on prices.
Telecom divested its network operations into a separate company, Chorus Ltd , last year so that company could roll out the bulk of the government-sponsored ultrafast broadband network by 2019.
Some analysts have speculated that Telecom might become a future takeover target of a cashed-up Telstra Ltd, which has gone through a similar separation of retail and network operations in Australia.
(Reporting by Naomi Tajitsu)