Vodafone New Zealand, a unit of the Vodafone Group, has agreed to purchase ihug, a local ISP, for NZ$41 million ($27 million).
Vodafone said ihug, owned by New Zealand ISP group iiNet, has about 125,000 subscribers at present and has a strong brand in the ISP broadband market.
Vodafone said ihug should help it to develop more compelling propositions for its customers.
Although Vodafone currently has a 53% market share in New Zealand, it has only a 20% share of the country's lucrative telecoms market.
It said the purchase of ihug complements its telecoms offering in the country.
Vodafone introduced wireless broadband services earlier this month and intends to launch a 'home zone' service in the next year, enabling customers to make calls through a local number for a fixed monthly fee.