Forum Archive Index - January 2000

[Michael Sprott <MSPROTT@clear.co.nz>]

I agree with the thoughts of Dylan and Phil. I must admit that I have had no
interest in Newcall as an investment up until this announcement. The
businesses that they were primarily in were long distance toll and ISP
services were both commoditising leading to an inevitable margin squeeze. I
could not see how this company was going to break into profitability.

Newcall is already a reseller of toll services mainly to businesses.
Reselling energy obviously fits perfectly with it's business model of low
capital investment. They already have channels to market and billing systems
set up so by adding these type of services to their mix they will add to
their earnings.

I may even buy some shares on the basis of this news.

> -----Original Message-----
> From: Ben Dutton [SMTP:bendutton@sharechat.co.nz]
> Sent: Thursday, January 27, 2000 3:48 PM
> To:   sharechat@sharechat.co.nz
> Subject:      [sharechat] Newcall (NGL)
> 
> I was surprised to see this announcement to the NZSE this morning from
> Newcall, a "telecommunications" company --
> 
> "Newcall has announced that it has acquired 75% of Auckland based
> embryonic
> electricity reseller, Energy Options Limited (EOL).
> The purchase price of $600,000 has been met by the issue of 1,050,000
> ordinary shares in Newcall at 57cps, with all shares subject to a
> restraint
> of trade.
> The total issued capital of the company following the issue of these
> shares
> will be 120,877,685 ordinary shares.
> Newcall have retained the management of EOL, both of whom were previously
> with Power NZ, to ensure industry knowledge and expertise is protected".
> 
> 
> These statements are taken from their press release --
> 
> "EOL has customers in the small and medium size business market, and
> that's
> exactly where NEWCALL is focused. We can offer additional telephony
> services
> to EOL customers and our customers have the benefit of reduced electricity
> prices.
> 
> "In fact we were so impressed with EOL that we changed to buying our
> electricity from them early in our discussions, resulting in significant
> savings in our energy bill," (MD Norman) Nicholls said.
> 
> Nicholls said, "At one level we are able to share call centres and billing
> systems while at another we have the exciting prospect through our
> recently
> acquired subsidiary, Iprolink, to provide Internet billing and other
> e-commerce marketing to a broader client base."
> 
> At a strategic level the move exploits the international trend towards
> utility convergence, Nicholls said. The purchase mean we have an
> opportunity
> to explore the provision of utility services at a very low cost."
> --
> 
> 
> Now, I have to admit that this came as a great surprise to me.  Newcall's
> purchase of an ISP, yes, that fits within my idea of a telecommunications
> company, but an electricity reseller??  Even though this purchase isn't
> very
> significant to their balance sheet, it does distort my view of the
> company.
> 
> What do other members of the forum think about this move?  I'd be
> interested
> in finding out other people's opinions...
> 
> Benjamin Dutton
> 
> 
> 
> 
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