KEY POINTS:
Energy company TrustPower sees its purchase of a small South Island telecommunications company as a step on the way to becoming a full service telco provider.
The move was also being viewed as an early stage in a trend that will see the telecommunications industry look considerably different
in five years' time.
Tauranga-based TrustPower announced yesterday it had bought, for an undisclosed amount, phone and internet company CallSouth and call centre Pulse Business Solutions, both based in Oamaru.
TrustPower, in which Infratil has a 50.5 per cent shareholding and the Tauranga Energy Consumer Trust 33 per cent, has around 220,000 customers nationwide.
Yesterday's announcement seems to have tickled the interest of some investors with TrustPower's shares up 23c to $8.43 by early afternoon today, although on low volumes of fewer than 59,000 shares.
Telecommunications Users Association (Tuanz) chief executive Ernie Newman said TrustPower's deal looked to be an early stage of a trend, with synergies between phone and power companies starting to become more apparent.
And while the similarities between power line companies and telecommunications network operators were obvious, it was also entirely plausible that a major telco could operate without any infrastructure of its own.
"You don't need the wires to provide a service, and equally you don't need to provide the service in order to make a buck out of the wires," Mr Newman said.
It was also becoming increasingly recognised that the type of business philosophy needed to bury cable in the ground with a 20- or 30-year return period, and the type of philosophy needed to provide modern telecommunications services over those lines were at opposite ends of the spectrum.
"I think the shape of the industry will be quite different five years from now.
"I hope and think that we will see a greater divergence between the suppliers of infrastructure and the suppliers of services," he said.
"I have no doubt that power companies are going to play a part somewhere in that process."
TrustPower had been dipping its toe into telecoms for some time, having sold toll services to its customers through telco ihug, before late last year setting up its own toll service provider Kinect.
TrustPower community relations manager Graeme Purches today said the take up for Kinect had been "reasonably good", but he would not give figures.
The move into telecommunications was seen as a way of adding value for TrustPower's customers, offering them a one-stop shop for power and telephone services, he said.
"It's comparatively easy for an electricity retailer, like TrustPower, to offer a telephone service. It's a bit more difficult for a telephone provider to offer an electricity service."
TrustPower already had customer service facilities, a call centre, and a nationwide billing system.
The telecommunications side of the business involved TrustPower buying services wholesale from other providers, then retailing them, in the same way it did with some of the electricity it sold.
"This is just a first step. It's very early days for us," Mr Purches said.
"We intend to become a full service telco provider in the future."
For companies such as TrustPower which had a customer service function and billed customers monthly, telecommunications was probably a logical add on.
"You have to have economies of scale to make it worthwhile, and we believe we've got that," he said.
"The telco market is evolving and there's things happening at the moment that will make that easier and easier to do on a national basis in the months ahead."
For now TrustPower had no intention of building its own telecommunications infrastructure.
- NZPA
