Singapore investors sought to fund company's growth

By ADAM GIFFORD

New Zealand listed telephone company Newcall Group is looking for Singapore investors to fund its expansion into that country's deregulated telecommunications market.

Chief financial officer Guy Pierce said the expansion was expected to cost between $S5 million to $7 million over two years to build up the brand, with the business conservatively forecast to start turning a profit in the second half of next year.

The company will get the money by selling a minority stake in its Newcall Singapore subsidiary.

``We're looking for strategic, corporate players in Singapore because there is an opportunity to take this into the public arena later,'' said Mr Pierce.

He said Newcall's board had a policy not to invest financially in subsidiaries. Its contribution was the intellectual property, methodologies and experience it had built up in the New Zealand market.

Singapore was seen as the springboard into other Asian markets as they deregulated.

Mr Pierce said the Singapore expansion was driven by Newcall New Zealand, rather than its 65 per cent shareholder, Bangkok-listed Charoong Thai Wire and Cable Public, which in turn was largely owned by US-based Pacific Electric Wire and Cable.

``They have identified Newcall as the vehicle for telephone expansion in Asia,'' he said.

Sales and marketing director Stephan Goodburn said there was an opportunity for healthy returns in the early years, before margins dropped significantly.

He said because Singapore had gone for 100 per cent deregulation, including full number portability, ``we can go to a client and take their total bill overnight.''

``If we sell to a a business in New Zealand today, we can take at best 40 per cent of the bill.''

There was also advantage in moving fast against Singapore Telephone because ``satisfaction is dropping as people realise the profits Singtel has been making.''

Newcall was installing a calling card switch and would start selling phone cards in Singapore in the next couple of weeks, followed by other services such as local and mobile access as the local sales force was ramped up.

Because it was leasing bandwidth on existing cable networks, Newcall could be in business a lot more quickly than many of its competitors.

``The larger carriers will want their own cable, so they will take longer to be up,'' Mr Goodburn said.

As well as the licences it had won already, Newcall had applied for a facilities licence which would give it its own dialling code.

Mr Goodburn said Newcall's model was to combine the Softel switches with French-made billing software and have 80 per cent of staff working in the sales area.

Its target market was small and medium-sized businesses, as well as the ``foreign residents'' who made up a third of Singapore's 5 million population.