Australian telecoms giant Telstra announced Thursday it had agreed to sell its New Zealand subsidiary TelstraClear to Vodafone for NZ$840 million ($667.5 mln).
Telstra chief executive David Thodey said the sale, which needs approval from New Zealand regulators, had "a strong strategic rationale".
"The deal is a natural one, bringing together TelstraClear’s fixed telecommunications and data products and corporate client-base with Vodafone New Zealand’s mobile offering and retail customer-base," he said in a statement to the New Zealand stock exchange.
Telecommunications Users Association of New Zealand chief Paul Brislen said the deal would create a company capable of challenging Telecom Corp's market dominance in New Zealand.
"It's good to see a company finally having the scale to take on Telecom and actually be a serious competitor right across the board," he told the New Zealand Herald.
"With TelstraClear's network behind it, we will start to see some real competition, I would hope."
Telstra said regulatory approval for the deal was likely to take a few months.