Global telecoms group Vodafone is merging its New Zealand unit with the country's largest provider of pay TV, Sky Network Television.
The deal, worth £1.7bn, is in response to growing competition in the country from the likes of Netflix and other internet streaming services and will create one of the biggest companies on the New Zealand Stock Exchange.
Sky, which has no connection to the UK TV company despite a shared name, will pay Vodafone, the world's second-biggest mobile carrier, 1.25bn New Zealand dollars (£616m).
in cash and issue new shares.
Vodafone will own 51 per cent of the combined company and the price is a 21 per cent premium to Sky's closing price yesterday.
The merged business will have total revenues of 2.9bn New Zealand dollars, excluding integration costs of the deal.
Last month Vodafone reported further declines in its final results for the year - but forecast a turnaround to come in 2017.
Sky has 830,000 subscribers across New Zealand, while Vodafone NZ has more than 2.35m mobile accounts.
Vodafone's New Zealand head of operations Russell Stanners is set to become the chief executive of the new company. He said:
This merger brings together Sky’s leading sports and entertainment content with our extensive mobile and fixed networks.
Shares in Sky lept 17 per cent on the news, however Vodafone shares tracked lower in London by around 1.7 per cent.