Hamish Fletcher

Business reporter for the NZ Herald

Kordia puts brakes on cable

The Southern Cross cable comes ashore on Takapuna Beach in 1999. Photo / File
The Southern Cross cable comes ashore on Takapuna Beach in 1999. Photo / File

Kordia has posted an after-tax loss of almost $15 million and says its plans to build a submarine internet cable between Auckland and Sydney are on ice.

The state-owned transmission company first announced its intentions to build the transtasman internet pipe in 2008, but has struggled to gather funds to do so.

Kordia said yesterday its "OptiKor" cable was on hold.

Despite this, Kordia chief executive Geoff Hunt said the project could go ahead in the future.

"Our assessment is that the market isn't quite ready [for the cable]. We've done the work, we're taking a pause at present, there are other cable projects around. When the market conditions change we'll reignite," Hunt said.

OptiKor was originally intended to rival the Southern Cross cable, which has a monopoly on the sale of international internet capacity.

But another company, Pacific Fibre, also has a cable in the works and is in the final stages of gathering capital for a second internet link out of New Zealand.

Kordia's loss of $14.7 million for the year ending June 30 is $13.8 million larger than what the company recorded in 2010.

Hunt attributed the loss to a $21.9 million write-down on broadcast assets affected by the Government switchover of free-to-air television to digital frequencies, which begins in 2012.

Kordia was not expecting the switchover to happen this early and was required to depreciate its assets accordingly, Hunt said.

Although Kordia is still in the red, Hunt was adamant the company was in good financial health.

It posted earnings before interest, tax, depreciation and amortisation (ebitda) for the year of $51.3 million, up 1 per cent from 2010.

Revenue for the year was $295 million, up 14 per cent.

Internet and phone provider Orcon, a subsidiary of Kordia, posted a revenue increase of 31 per cent.

Orcon has continued to gain momentum since the launch of its "Genius" phone and internet device in July, Hunt said.

While demand for "Genius" has exceeded expectations, Orcon has received a number of complaints in the last month from customers who have had delays getting connected.

"We're very pleased with the way that product is performing and the way sales growth is proceeding," Hunt said.

"We've have staff working very long hours and we're down to very few customers who have technical issues. We apologise to those who have experienced delays."

Kordia also announced it had reduced its net debt by $16.2 million over the last year to $73.8 million.

- NZ Herald

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