SKY Network Television : June 2016 Explanatory Memorandum

921efaac-f15d-4aef-8d0e-e3aff7b50ac9.pdf CREATING A LEADING TELECOMMUNICATIONS AND MEDIA GROUP

VOTE IN FAVOUR

NOTICE OF MEETING AND EXPLANATORY MEMORANDUM RELATING TO THE MERGER OF THE BUSINESSES

OF SKY AND VODAFONE NZ

IMPORTANT TRANSACTION FOR SKY SHAREHOLDERS

Sky Network Television Limited (SKY) is pleased to announce its agreement to merge the businesses of SKY and Vodafone New Zealand Limited (Vodafone NZ).

SKY proposes to acquire all of the shares in Vodafone NZ from Vodafone Europe B.V. (Vodafone) for a total purchase price of $3.44 billion, paid for through a mixture of cash and SKY shares. The issue of shares will result in Vodafone owning 51% of the total number of shares in SKY.

To achieve the proposed acquisition, SKY seeks shareholder approval to:

• undertake the proposed acquisition and the other ancillary transactions described in this Notice of Meeting and Explanatory Memorandum;

• issue new SKY shares to Vodafone to pay $2.19 billion of the price payable to Vodafone; and

• incur new debt to fund the $1.25 billion cash portion of the price payable to Vodafone.

  The transactions referred to above are collectively referred to as the "Proposed Transaction" in this document.

  The purpose of this Notice of Meeting and Explanatory Memorandum is to:

• inform you about the Proposed Transaction and the important matters requiring SKY shareholder approval in connection with the Proposed Transaction;

• make you aware of the special meeting to be held at the Pullman Hotel (Regatta Room D), Corner Princes Street and Waterloo Quadrant, Auckland 1010 on Wednesday 6 July 2016 at 10:30 a.m. to vote on the resolutions relating to those important matters;

• enable you to appraise the implications of the Proposed Transaction; and

• help you decide whether to vote for or against the resolutions. Note that if you choose not to vote at all, whether the resolutions are passed or not will be determined solely by reference to the number of votes cast by the shareholders who do vote.

As such, this is an important document that requires your immediate attention and the Board strongly advises that you read it (including the Independent Report from Grant Samuel that accompanies this Notice of Meeting and Explanatory Memorandum as Appendix One) carefully and in full before deciding how to vote. The Independent Report is a summary of the full independent adviser's report and appraisal report by Grant Samuel, a copy of which can be downloaded from the investor relations page on SKY's website at www.sky.co.nz/investor-relations.

A hard copy of that full report can also be requested by calling 0800 378 300 (freephone within New Zealand), 1800 501 366

(freephone within Australia) or [phone].

CONTENTS

1. LETTERS FROM SKY AND VODAFONE 4

2. KEY TRANSACTION HIGHLIGHTS 6

3. KEY CONSIDERATIONS RELEVANT TO YOUR VOTE 20

4. OVERVIEW OF THE COMBINED GROUP 26

5. OVERVIEW OF VODAFONE NZ 36

6. KEY RISKS 44

7. DETAILS OF THE PROPOSED TRANSACTION AND TRANSACTION DOCUMENTS 50

8. NOTICE OF MEETING OF SHAREHOLDERS 58

9. EXPLANATION OF THE RESOLUTIONS AND ADDITIONAL INFORMATION 60

10. GLOSSARY 64

APPENDIX ONE - INDEPENDENT REPORT APPENDIX TWO - FINANCIAL INFORMATION

DIRECTORY IBC

DISCLAIMER

This Notice of Meeting and Explanatory Memorandum is not an offer of securities or other financial products and the provision of this document to any person does not constitute, and may not be used for the purposes of, an offer of securities or other financial products or interests of any kind

to that person or an invitation to any person to apply for the issue of securities or other financial products or interests of any kind.

NO INVESTMENT ADVICE

This Notice of Meeting and Explanatory Memorandum has been prepared without reference to the investment objectives, financial and taxation situation or particular needs of any Shareholder or any other person or entity. The information and recommendations contained in this Notice of Meeting and Explanatory Memorandum do not constitute, and should not be taken as, financial or investment advice. The Board encourages you to seek independent financial, investment or other professional advice before making any decision as

to whether or not to vote in favour of the Resolutions or any other investment decision in connection with any matter related to this Notice of Meeting and Explanatory Memorandum.

WARNING AS TO FORWARD LOOKING STATEMENTS

This Notice of Meeting and Explanatory Memorandum contains certain statements that relate to the future, including some prospective financial information. Such statements are not a guarantee of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of SKY and which may cause actual results, performance or achievements of SKY to differ materially from those expressed or implied by such statements. None of SKY, Vodafone Plc,

any of their respective subsidiaries or their respective officers, directors, employees or advisers or any person named in this Notice of Meeting and Explanatory Memorandum or involved in the preparation of this Notice of Meeting and Explanatory Memorandum makes any representation or warranty (either

expressed or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results

expressed or implied in any forward looking statement. Accordingly, Shareholders are cautioned not to place undue reliance

on such statements. You should read statements that relate to the future, including any prospective information in this document, in the context of all of the other information in this document (including, in particular, in the section on page 44 headed "Key risks").

ENQUIRIES

Enquiries in connection with this Notice

of Meeting and Explanatory Memorandum can be directed to your broker, financial, investment, other professional adviser,

or you can contact the investor hotline on 0800 378 300 (freephone within

New Zealand), 1800 501 366 (freephone

within Australia) or [phone]. If you have any questions about the number of shares you hold in SKY, or how to complete the voting/proxy form, please contact SKY's registrar, Computershare Investor Services Limited on [phone].

ADDITIONAL INFORMATION ABOUT SKY

SKY is subject to continuous disclosure obligations under the NZX Listing Rules and the ASX Listing Rules. Market releases by SKY, including its most recent financial statements, are available atwww.nzx.com under stock code SKT or at www.sky.co.nz/ investor-relations. Further background and historical information in connection with SKY can be found on the main page of SKY's websitewww.sky.co.nz.

DEFINED TERMS, TIMES AND DATES

Unless otherwise indicated, capitalised terms used in this Notice of Meeting and Explanatory Memorandum and Appendix Two - Financial Information have the specific meaning given to them in the Glossary on page 64 of this document. All times and dates

referred to in this Notice of Meeting and Explanatory Memorandum are times and dates in Auckland, New Zealand, unless otherwise stated.

CHARTS, MAPS AND DIAGRAMS

Any diagrams, charts, maps, graphs or tables appearing in this Notice of Meeting and Explanatory Memorandum are illustrative only and may not be drawn to scale.

FINANCIAL AMOUNTS

All financial amounts in this Notice of Meeting and Explanatory Memorandum are expressed in New Zealand currency unless otherwise stated. Any discrepancies between totals in tables or financial statements, or in calculations, graphs or charts are due to rounding. All financial and

operational information set out in this Notice of Meeting and Explanatory Memorandum is current as at the date of this Notice of Meeting and Explanatory Memorandum, unless otherwise stated. Certain financial amounts relate to the future, including,

in particular, financial information set out in Appendix Two - Financial Information. Forward looking statements should be read together with the other information in this Notice of Meeting and Explanatory Memorandum including the section

on page 44 headed "Key risks" and the assumptions and the sensitivity analysis in Appendix Two - Financial Information.

Certain financial information included is non-GAAP financial information. An explanation of the non-GAAP measures

employed by SKY and calculations from information prepared in accordance with GAAP are included in Appendix Two

- Financial Information.

DATE OF NOTICE OF MEETING AND EXPLANATORY MEMORANDUM

This Notice of Meeting and Explanatory Memorandum is dated 13 June 2016.

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