Internet company Orcon is merging its operations with owner Kordia's other New Zealand telecommunications business, putting up to 59 jobs in jeopardy.
Orcon and Kordia Networks are integrating operations to form a new business called Kordia New Zealand.
Nine staff members made will be made redundant as a result of the restructure, which may also see 50 call centre staff outsourced to Manila.
The new combined business will have an annual turnover of $161 million and 320 staff and be headed by existing Orcon chief executive Scott Bartlett.
Despite the merger, Orcon will remain a brand of the new business and serve residential and small business customers.
According to Kordia Group chief executive Geoff Hunt the integration will eliminate duplication and put the businesses in a better position to grow in a competitive market.
"Today's announcement positions us to be solutions-led, combining the fast, innovative style of Orcon with the network quality of Kordia. It will create New Zealand's most innovative and reliable provider of business-critical information services.
"The move will also enable us to eliminate the increasing duplication of network infrastructure and associated support staff. And as both businesses have developed services for business customers in parallel, the time is also right to rationalise the product set and present a simple, unified offering to this market," Hunt said
Kordia Group recorded a net profit $12.1 million net profit in the 12 months ended June 30, turning around a loss of $12.1 million a year earlier.
Kordia paid $23.4 million to buy Orcon in 2007 from founder Seeby Woodhouse
Labour's Communications and IT spokesperson Clare Curran said the merger was part of a "worrying trend" for businesses to make cost cutting decisions at the expense of Kiwi jobs.
"The fact that it's a state owned enterprise making the decision reinforces the lack of commitment by the National Government to investing in Kiwi jobs.
"National has removed the social responsibility clause which ensures SOEs have to take into account community interests and this is the result.By Hamish Fletcher @hamishfletcher Email Hamish