Asia Online pulls plug on NZ

By ADAM GIFFORD

Internet service provider Asia Online New Zealand has gone into voluntary liquidation, the victim of the failed dotcom strategies of its overseas owners.

Kerryn Downey of KPMG said directors named him as liquidator yesterday morning, after United States investors withdrew the flow of cash.

"It was the logical and prudent thing to do," said Mr Downey. "The business in New Zealand has been losing money, and was being funded from the States."

He said Asia Online's Australian subsidiary also went into voluntary administration yesterday.

Administrator Scott Kershaw from KPMG's Sydney office expected to announce a quick sale.

"We are continuing to support services to support the sale of the Australian operation," Mr Downey said.

"I'm also having discussions with prospective investors for the New Zealand business."

He refused to say to whom he was talking, but sources said he had spoken to Sky Television.

Sky, as well as being a customer, sought to buy the business - then the Internet Company of New Zealand (Iconz) - in 1999 before Hong Kong-based Asia Online stepped in with a bigger offer.

Other customers include Carter Holt Harvey, New Zealand Post and Wilson & Horton.

Nigel Stanford, general manager of trading site Trademe.co.nz, said his company had a large amount of data on Asia Online's servers and the site generated about 8 million page views a month.

"They have assured us service will not be interrupted, but we're really in the dark here," he said.

Asia Online was backed by Japanese technology investor Softbank and GE Capital in its bid for Iconz.

The purchase of Iconz, one of the first commercial ISPs in New Zealand, was part of a huge buy-up of ISPs and web design companies around the Pacific rim.

Asia Online claimed it would eventually be in a position to supply business internet services to every small-to-medium enterprise in Asia.

A source close to the company said the strategy was to bulk up and then list on the Nasdaq, allowing the original investors to exit at a profit.

But those dreams were scrapped last October, when it became clear there would be no quick recovery in the technology market.

Asia Online was then left with a high cost structure which fees from ISP activities could not cover.

It tried to save costs by centralising, stripping out New Zealand management and merging operations here with those over the Tasman.

Service calls are handled by the Sydney call centre, and Australia also handles the network management.

At its peak Asia Online had about 900 staff, but when the shutters went up it had fewer than half that.

In New Zealand about 40 staff remained.