Growth opportunities being explored by TeamTalk

Rob Hosking

Monday 5th April 2004

Higher dividends for investors, or expansion, are being promised by newly listed mobile radio communications company TeamTalk.

The company launched $8 million initial public offering this morning and says it expects to pay a fully imputed annual cash dividend of 15 cents per share for each of the 2004 and 2005 financial years.

Managing director David Ware says Teamtalk is looking at a number of possible growth opportunities "but we don't have anything specifically planned at the moment."

Two options recently looked at, and discarded, include a joint venture in Australia with Motorola, and buying up several toll resellers in New Zealand and rolling them together.

"The Motorola opportunity had two things going against it: it was a start up and it was in Australia. The toll reseller business just didn't stack up financially", Ware says. "They are operating on wafer-thin margins and they are also basically surviving at the whim of Telecom."

The company has a clear preference for expansion by acquisition and three years ago it bought Telecom's mobile business unit.

Teamtalk has been running since 1994 and its client base is mostly companies with large fleets - the ambulance service is the largest customer, and others include taxi companies, and trucking and courier firms.

While voice has been the main business, those firms are increasingly sending data across their networks - about 30% of all calls are now data calls.

In the last two financial years Teamtalk has generated over $20 million of operating cash flow before financing charges, and much of this was used to repay debt.

"Even after the payment of dividends, we expect to have in excess of $3 million per annum of cash available either to repay debt or expand the business," Ware says.

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