Report Sky Network Television Limited Independent Adviser's Report and Appraisal Report in relation to the Proposed Acquisition of Vodafone New Zealand Limited

Grant Samuel confirms that it:

  • has no conflict of interest that could affect its ability to provide an unbiased report; and

  • has no direct or indirect pecuniary or other interest in the proposed transaction considered in this report, including any success or contingency fee or remuneration, other than to receive the cash fee for providing this report.

Grant Samuel has satisfied the Takeovers Panel, on the basis of the material provided to the Panel, that it is independent under the Takeovers Code for the purposes of preparing this report.

Prepared by

GRANT SAMUEL & ASSOCIATES LIMITED

Auckland

Sydney

Melbourne

June 2016

Table of Contents

  1. Terms of the Proposed Transaction 1

  2. Transaction Terms 1

  3. Shareholder Approval 4

  4. Scope of the Report 5

  5. Purpose of the Report 5

  6. Basis of the Evaluation 7

  7. Sources of Information 7

  8. Limitations and Reliance on Information 8

  9. Overview of the Telecommunications Industry in New Zealand 11

  10. Overview 11

  11. Market Segments and Products 12

  12. Market Structure 13

  13. The Mobile Market 14

  14. The Fixed Line Market 15

  15. Infrastructure 16

  16. Wholesale Access to Infrastructure 17

  17. UFB and RBI 18

  18. Market Trends and Outlook 18

  19. Overview of the Television Broadcasting Industry in New Zealand 22

  20. History of Broadcasting in New Zealand 22

  21. Market Structure 22

  22. Distribution of Content in New Zealand 23

  23. Viewing Trends in New Zealand 24

  24. Over-the-Top Services in New Zealand 25

  25. Market Trends and Outlook 26

  26. Profile of Sky TV 29

  27. Background and History 29

  28. Business Operations 29

  29. Financial Performance 35

  30. Financial Position 37

  31. Cash Flow 39

  32. Capital Structure and Ownership 40

  33. Share Price Performance 40

  34. Valuation of Sky TV 43

  35. Summary 43

  36. Value of Business Operations - DCF Analysis 44

  37. Value of Business Operations - Multiples Analysis 48

  38. Other Assets and Liabilities 59

  39. Net Borrowings 60

  40. Other Adjustments 60

  41. Profile of Vodafone NZ 61

  42. Background and History 61

  43. Business Operations 62

  44. Financial Performance 68

  45. Financial Position 71

  46. Cash Flow 72

  47. Valuation of Vodafone NZ 73

  48. Summary 73

  49. Value of Business Operations - DCF Analysis 73

  50. Value of Business Operations - Multiples Analysis 77

  51. Profile of the Combined Group 90

  52. Overview 90

  53. Synergies 90

  54. Earnings 90

  55. Dividends 92

  56. Financial Position 92

  57. Cash Flow 93

  58. Evaluation of the Proposed Transaction (Takeovers Code) 94

  59. Summary 94

  60. Rationale for the Proposed Transaction 96

  61. Synergies 96

  62. Strategic and Other Benefits 97

  63. Impact on Capital Structure 98

  64. Impact on Share Price 99

  65. Control Issues 101

  66. Acquisition Analysis 103

  67. Merger Analysis 103

  68. Terms of the Share Issue 104

  69. Alternatives 105

  70. Disadvantages and Risks 106

  71. Other Matters 107

  72. Investment Decision 108

  73. Evaluation of the Issue Price and Terms (NZX) 109

  74. Qualifications, Declarations and Consents 110

  75. Qualifications 110

  76. Disclaimers 110

  77. Independence 110

  78. Declarations 111

  79. Consents 111

  80. Appendices

    1. Valuation Methodologies

    2. Selection of Discount Rate

    3. Market Evidence - Pay Television

    4. Market Evidence - Telecommunications

      5. THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

    Sky Network Television Ltd. published this content on 13 June 2016 and is solely responsible for the information contained herein.
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