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Australian media magnate Kerry Stokes has previously expressed an interest in expanding to New Zealand, but analysts had not been expecting a move into Telecom.
The telco announced yesterday that Yahoo!7, controlled by Stokes, would replace Microsoft's MSN as its online partner for its Xtra internet service.
After the shake-up of Australian media ownership laws last month, Stokes, 66, has made no secret that he is interested in New Zealand media assets.
One of his targets has been Fairfax Media - which owns newspapers and magazines in New Zealand - but that company is less vulnerable after last week's merger with Rural Media.
TV3 has been considered one of the likely targets and the channel's future is dependent on how CanWest Global deals with its Australasian assets.
The Telecom Xtra joint venture is Stokes' first investment since the privatisation of his Network Seven TV business with equity firm Kohlberg Kravis and Roberts, which gave him a A$4 million ($4.5 million) war chest.
But it is unlikely to be his last.
The privatised company owns 51 per cent of Yahoo!7 and that in turn owns 51 per cent of the newly branded Yahoo! Xtra.
Until now, Stokes' involvement in New Zealand has been through ownership of the smallest woman's weekly magazine in the country, New Idea. But the deal with Xtra establishes Stokes, Australia's eighth-richest man, as a player in New Zealand.
In the past year Stokes' Channel 7 has been a high flyer in Australia and has played an important role in the content on Yahoo!7.
Yahoo! Xtra is expected to have a big impact on the content part of Telecom's Internet Protocol Television.
A Telecom source said that Yahoo!7 and Telecom were moving to make internet entertainment services more available on television sets.
