Newcall moves operations to Singapore

By ADAM GIFFORD

Listed telephony company Newcall Group is asking shareholders to approve reducing their interest in subsidiary Newcall Communications Singapore to 37.5 per cent, as it prepares to move the bulk of its operations to Singapore.

Shareholders at Newcall's annual meeting next month will also be asked to approve the sale of internet service provider Iprolink to British firm PCL Internet International for $1.5 million.

The amount is less than half the $3.6 million it paid for the Auckland ISP two years ago.

Newcall managing director Jim Bracknell said the value of Iprolink was written down in last year's books. "The bloodbath is over. We got things cleaned up."

Last year, Newcall made a loss of $19.5 million with shareholders funds negative $1.4 million.

Its shares are trading at about 5c, well short of its high of 51c last April.

With the sale of Newcall's telephone customers to TelstraSaturn and Clear for $1.5 million, approval of the latest proposals will mean the only operation Newcall has here is its 75 per cent stake in electricity reseller Energy Options Limited, which has about 12,000 customers.

Newcall also has a billing system, built in New Zealand around a piece of French billing software, which directors believe can be sold to other utilities.

A PricewaterhouseCoopers independent appraisal report on the Newcall Singapore sell-down said Newcall will raise $S5 million ($6.5 million).

Two investors have already contributed $S2.55 million to Newcall Singapore as loans, which will be converted to shares.

Because most of the new shares are being issued to related parties, the deal must be approved by those shareholders who are not associated with those investors.

New Zealanders make up about a third of the shareholders of Newcall, which listed in October 1999 through a reverse takeover of NZ Salmon.

The major shareholder is Bangkok-based Charoong Thai Wire & Cable (CTW), and the new investment will mainly come from directors or companies associated with it.

Mr Bracknell said Newcall had stayed in the New Zealand telecommunications market too long.

"We should have taken this action a year ago, but because of the telecommunications commission of inquiry we held high hopes the regulatory environment would change."

Mr Bracknell said the problem was an entrenched incumbent "that is obstructionist when it comes to sharing revenue with other companies.

"This month we started offering local loop services and tolls out of Singapore. If we sign up a customer today, tomorrow we get 100 per cent of the revenue, including the local loop.

"In New Zealand it might take two to three weeks to convert the customer over, and then we only get 40 cents in every dollar of revenue."

He said development in Singapore so far had been funded from loans and the sale of calling cards. In the December quarter, sales were $S125,000, compared with a budgeted $S75,000.

"The calling card business has exceeded expectations. We're selling more than a million minutes a month to the Philippines alone.

"That's more than the total international toll minutes we were selling out of NZ."