Global telco giant Vodafone’s New Zealand arm announced early last month its proposal to merge with satellite pay TV operator Sky TV in a deal worth $3.27 billion (NZ$3.44 bn), with Vodafone holding a majority 51% stake in the merged company via its UK parent, Vodafone Group.

The commission announced in a statement of preliminary issues on Thursday that it is investigating whether the proposed merger will result in a substantial loss of competition in the market.

The two companies will have to wait until early November to see whether their merger gets the go-ahead from the commission which says it will make a decision by 11 November, or earlier if no issues are identified.

The commission has said it will only clear the proposed merger if it is unlikely to substantially lessen market competition.

The proposed merger is being closely watched by New Zealand’s largest telco, Spark which enjoys a dominant share of the NZ market.

When the proposed merger was announced, Spark reacted defensively, with managing director Simon Moutter saying, “the reality is that Spark has been competing successfully with a tightly integrated partnership between Vodafone NZ and Sky TV for a couple of years now. Vodafone NZ has been bundling and deeply discounting Sky TV products while Sky TV actively resells Vodafone NZ broadband”.

“During that time Sky TV’s core subscriber base has declined while Vodafone NZ’s broadband base has had little or no growth since they acquired Telstra Clear nearly four years ago. As such, we don’t believe a merged Sky TV and Vodafone NZ poses a greater challenge to Spark than the existing partnership has achieved to date."