Published on the 14/04/2015 | Written by Donovan Jackson
CallPlus has been acquired by Australian conglomerate M2 Group Limited for $250 million adding another layer to the shifting ISP sands…
The New Zealand internet service provider landscape has again shifted as CallPlus is acquired by Australian conglomerate M2 Group Limited for $250 million. The acquisition is expected to be complete by June 30 with no change to the existing local management team.
Listed on the Australian stock exchange, M2 is active in the telecommunications, electricity, gas, and insurance sectors and has revenues in excess of A$1 billion.
M2 CEO Geoff Horth says M2 will be maintaining CallPlus as a self-contained operating business to minimise integration risk. “The existing CallPlus management team will continue to lead the business, under the local leadership of Mark Callander, CallPlus’ long-term CEO,” he adds.
Horth notes that the two companies have enjoyed a long association, with CallPlus acting as a wholesale supplier to its existing New Zealand operation.
Callander says the time was right to grow the business even further and take it to the next level. “It signals a new era for the company. With M2’s wealth of experience and expertise, CallPlus is now in a position to continue to grow as we focus on our drive of connecting one in four Kiwi homes.”
CallPlus was founded by Annette Presley and Malcolm Dick in 1996.
According to research by consulting engineer Jonathan Brewer, New Zealand has nearly 80 ISPs in what is a relatively small market, dominated by Spark and Vodafone with 41 and 22 percent share respectively. CallPlus, which includes the CallPlus business, Orcon, Flip, Slingshot and 2talk brands, is the country’s fourth biggest ISP, with a market share estimated at 16 percent. Its sale to Australian interests closely follows the recent sale of Snap, the fifth placed ISP, to number three telco 2degrees. CallPlus had earlier been rumoured to be in the sights of 2degrees as a potential acquisition.
In such a market, consolidation can be expected – but it appears to be coming from the top, rather than the bottom end of the market. Craig Young, TUANZ CEO, agrees, however he says: “This acquisition is a bit of a funny one as it is not really a consolidation, but an Australian company coming in, which already has a very small local subsidiary here called Black and White that will probably be rolled into CallPlus now.”
Given that there will be no immediate changes to CallPlus operations or structure, Young doesn’t expect any significant change to the market from a user’s perspective. However, he says CallPlus can be expected to attack the market.
“With around 16 percent market share, it is a big ask to switch another nine percent, and switching is the only place where that one in four [referred to by Callander] is likely to come from.”
Young adds that CallPlus has one potential weakness: “It has a chink in its armour in that it doesn’t have a mobile component; it is probably likely to increase its focus on corporate, which will be difficult without mobile. That’s why 2degrees bought Snap [because a full service spectrum attracts corporate clients].”
