GEMS and CVP test New Zealand’s mobile duopoly

Two private equity firms, one in Hong Kong, and the other in London, are poised to take a controlling stake in a mobile phone operator in New Zealand that has been attempting to break the country’s duopoly.

GEMS, an Asia-focused private equity firm in Hong Kong, has partnered Communications Venture Partners, a UK telecom specialist fund manager, to invest approximately $100 million for a controlling stake in Econet Wireless New Zealand.

A joint venture between South African based Econet Wireless and local Maori investment company Hautaki, Econet is a licensed but yet-to-be launched 3G mobile cellular operator in New Zealand.

New Zealand has only two mobile phone operators – Vodafone, with a 65% market share, operates a GSM network, and Telecom, with a 35% market share, operates a CDMA network. Effectively, both have monopolies in their respective networks.

GEMS and Communications Venture Partners are ready to start conducting due diligence and further appraisal of the regulatory environment in New Zealand, “to facilitate building a competitive, larger nationwide mobile network,” Econet said in a statement.

If a deal is concluded, Econet will become GEMS’ first investment in New Zealand,  said Fergus Wilmer, executive director of GEMS, who expects a deal to be completed in two months.

Together, the two private equity firms are expected to hold a combined 75 percent stake in Econet upon a deal finalization.