Forum Archive Index - January 2001

[Philip Robinson <PhilipR@Pharmac.govt.nz>]

REL: 1241 HRS Newcall Group Limited
ASSET: NGL:  SELLS NZ TELECOMMUNICATIONS ACTIVITIES
NEWCALL Group, today announced a significant restructuring with the decision
to sell off the customer base of its telco subsidiary, NEWCALL
Communications.  Making the announcement, NGL's COO, Guy Pierce, said that
in
the first instance a large portion of NEWCALL Communications' customers will
be sold to, and serviced by, the business division of TelstraSaturn. He said
the transaction would be subject to the consent of NGL shareholders and the
price of the transaction was not being disclosed at this time.  Mr Pierce
said that NGL expected to sell NEWCALL Communications' remaining customer
base to another telco in the near future.  He indicated that NGL would also
be looking to sell off its internet service provider, Internet Prolink NZ
(Iprolink), which it acquired in January 2000, as without a
telecommunications arm it would no longer make sense for NGL to maintain an
ISP.  NGL, he said, would instead concentrate on developing its remaining
assets which include NEWCALL Communications' sophisticated billing system, a
75 percent shareholding in electricity reseller Energy Online, and a 100 per
cent shareholding in NEWCALL Communications Singapore PTE Ltd._
_
"We see potential for selling our billing system to the service and utility
sectors both in New Zealand and abroad," said Mr Pierce. "However, our
strongest performer at this stage is Energy Online which grew its customer
base from 300 to over 10,000 in the 12 months to December 2000.  "This could
have been even larger but we decided to hold back in order to ensure that
our
administrative capability was able to cope adequately with such rapid
growth.
This year we will again focus on EOL's growth as we are convinced that once
we reach our targeted customer base later in the year, NGL's share value
should be enhanced."_
_
With the early growth of its customer base, NEWCALL Communications expanded
and at present 42 employees are located at the group's NEWCALL Tower
headquarters in Khyber Pass, Auckland.  Mr Pierce said that some NEWCALL
staff may be hired by TelstraSaturn Limited, while some would remain with
the
group._
_
 He said that the main reason that NGL had decided to sell off its
telecommunications interests was because of the competitive nature of the
industry in NZ. _
_
"A truly competitive telecommunications industry _ as they have in the US -
would leave plenty of room for the smaller innovative telcos like NEWCALL.
Instead, due mainly to its contestable nature, which favours only the big
players, the smaller telcos are finding it increasingly difficult to survive
in NZ," he said._
 _
Adding to the group's difficulties was the worldwide trend of diminishing
toll charges, made worse in NZ by the lack of support for true competition,
which in some instances had seen retail toll prices below their wholesale
cost. This trend had resulted in telco stock values falling internationally
he said._
_
"We therefore see any additional call for capital to be involved in
NEWCALL's
telecommunications business in New Zealand bringing only further negative
returns.  So instead, our focus now will be on the protection and
enhancement
of existing shareholder value through the development of Energy Online and
our Singapore subsidiary."_
NGL Chairman, David Sun, said that the 'last straw' for NGL had been the
publication in December of the report of the Government appointed Fletcher
Commission into Telecommunications which he said lacked any real support for
smaller telcos.  "The Government's failure to appoint a regulator, or to
place restrictions on predatory pricing policies, would certainly not be
allowed in open markets like the US and Singapore which are now much more
attractive to foreign investors," said Mr Sun.  _
_
"We have concluded that NZ is no longer the place to invest any further in a
telecommunications company, especially when there are these other markets
that afford investors much more potential, and far less risk and exposure.
Instead we will be concentrating our efforts and investment in Singapore
which, unlike NZ, wants an open and expanding telecommunications industry."_
_
NGL's principal shareholder is Charoong Thai Wire & Cable Public Company, a
subsidiary of Asia Pacific Wire & Cable Corporation, a US company that is
traded on the NYSE.  _
_
TelstraSaturn Limited is a joint venture company held 50:50 by Telstra
Corporation and Austar United Communications._


________________________________
Philip Robinson
DDI: 04.460.4989
Cell: 021.422.104


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