Vodafone, Canada's Axia ally in Crown fibre bid

ABOVE: Vodafone NZ chief executive Russell Stanners with Axia NetMedia chief executive Art Price at their joint Auckland press conference this morning. Vodafone NZ has been revealed as Canadian fibre company Axia NetMedia'smystery local partner in its bid for the government's $1.5 billion ultrafast broadband initiative.

ABOVE: Vodafone NZ chief executive Russell Stanners with Axia NetMedia chief executive Art Price at their joint Auckland press conference this morning.

Vodafone NZ has been revealed as Canadian fibre company Axia NetMedia'smystery local partner in its bid for the government's $1.5 billion ultrafast broadband initiative.

The pair will square off against Telecom and others vying to participate in the Crown fibre roll-out - although the situation is shaded by the fact Vodafone is spreading its bets, also keeping dialogue open with other contenders, including Vector.

Vodafone equity stake
Vodafone New Zealand chief executive Russell Stanners said his company, which is UK owned, could take an equity stake in the local vehicle set up by Axia if it were successful in its Crown Fibre bid.

Speaking to NBR after the press conference, Mr Stanners said that Vodafone had "endorsed" Axia's Crown Fibre bid and "taken an option to invest." Vodafone has also committed to being a retailer for Axia, should it win.

Under bidding rules, that stake could be up to 49%.

Certainly, Axia needs access to capital as well (as the ability to tap Vodafone's fibre assets). IDC analyst Rosalie Nelson pointed out that if listed on the NZX, Axia would sit somewhere between Xero (market cap: $150 million) and Turners & Growers at $160 million (Axia is listed in on the Toronto exchange - AXX). 

A similar arrangement in Singapore saw Axia win the city-state's Crown fibre contract after brining Singtel-Optus onboard as a 30% stakeholder (although in that case the play was political as well as commercial - Singtel-Optus is majority-owned by the Singapore government's investment arm, Temasek Holdings).

Vodafone still open to other options
Mr Stanners said Vodafone was also talking to Vector - its long-standing fibre backhaul partner, which is bidding for Auckland - and other parties: "We have to. No one knows who's going to be successful."

Talks with Axia were the most advanced, however.

Axia approached Vodafone at the very beginning of the Crown fibre tender process, Mr Stanners said.

While all Crown fibre tenders are confidential, Mr Stanners said he won't to avoid the appearance of secret deals down the track.

That overbuild thing
Axia, which has already won Crown fibre contracts in Singapore and its native Alberta, plus a string of public-private fibre deals in a number of regions of France, has previously said it wants to build a new fibre optic network for New Zealand from scratch.

The Canadian company also wants its fibre backhaul to be shared by all mobile phone companies, with "competition at the wireless level" as chief executive Art Price put it to NBR.

This morning, Mr Price said if Axia's Crown fibre bid was successful, it would create a new commercial entity to build its network.

However, Mr Price is no longer talking about a totally new network; today tempering his previous comments by saying his company could buy access to existing fibre – such as Vodafone's – when the situation warranted.

In terms of Axia's plan for all mobile providers to share one, Axia-controlled backhaul network, Mr Stanners said only that he would be interested in buying some access at the right price.

Unpure play?
Allowing a retail phone company to directly invest in Axia's NZ operation runs counter to Mr Price's former positioning of his company as a pure-play wholesaler - thereby creating an entity that was easy to regulate, and helping to smooth any agitation about a foreign company owning New Zealand fibre.

But Mr Price said all retailers would get equal access to Axia's network. The benefit of having Vodafone onboard would be that it helped to generate demand, the Axia boss said.

Strict separation guidelines would allay fears about Axia taking investment money from a retailer, allowing it to fulfill the Crown fibre tender's public policy goal.

Similar retailer arrangements were in place and working for Axia in Singapore and France, said a rep for Mr Price. In Singapore, for example, where Axia co-invests with Singtel-Optus.

But in a fiercely political competition, perception is everything, and Axia no longer looks so pure.

Crown Fibre Holdings is due to come up with a shortlist of partners by the end of June, but this may not be made public until negotiations with preferred bidders begin later in the year, if then.

MORE:
Canadians: Why we should get should get Kiwi Crown fibre.

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