A proposed merger of New Zealand-based mobile operator 2degrees and broadband provider Orcon Group won approval from the market’s competition watchdog, paving the way for the creation of the third-largest service provider in the country after Spark and Vodafone New Zealand.

Sue Begg, deputy chair of New Zealand’s Commerce Commission (ComCom), stated the regulator was satisfied the merger was unlikely to substantially lessen competition in the country’s retail and wholesale telecoms markets.

She explained the merged entity “will continue to face strong competition from existing competitors, including Spark and Vodafone”.

2degrees and Orcon agreed to combine their local operations in December 2021, creating an operator with more than 1.5 million mobile and 345,000 fixed-line subscribers.

The merged company will operate under the 2degrees brand and have 1,800 mobile sites, offering 98.5 per cent population coverage.

It will also swallow up what Begg described as the market’s largest MVNO, which markets services under the Vocus brand.

The deal followed Macquarie Asset Management and Aware Super, owners of Vocus Group and its New Zealand subsidiary Orcon, signing an agreement to acquire 100 per cent of 2degrees from Trilogy International Partners (TIP) and Tesbrit. The implied enterprise value of 2degrees reportedly equates to NZD1.7 billion ($1.1 billion).

Orcon Group CEO Mark Callander was appointed CEO of the merged entity. In a statement, he noted the ComCom clearance is “the first step in the regulatory approval process” for the merger.

He stated the outcome “recognises that the merger will enhance competition and provide benefits to Kiwis and Kiwi businesses”.

Vodafone claims a total of 2.4 million customers, while Spark reported 2.4 million mobile connections and 702,000 broadband customers at end-2021.