Woosh to rival Telecom

by PETER GRIFFIN


Emerging broadband player Woosh Wireless plans to have a telephone service rivalling Telecom's in the market in two months and is aiming for an NZX listing early next year.

Woosh chairman Rod Inglis said the debut of voice services, which he claims will undercut Telecom's monthly line-rental charges, would generate sufficient appetite for a listing in the first half of 2005.

"We're doing internal tests. We'll launch voice in the next two months commercially," he said.

A top-up of private investment may precede the listing.

Backed by US venture capitalist Clarity Partners and big name local investors including Todd Corporation, Craig Heatley and Stephen Tindall, Woosh and previous incarnation Walker Wireless have swallowed about $60 million in funding.

Documents the Herald obtained suggest Woosh will require between $60 million and $80 million to cover 70 per cent of the country, but has a good chance of delivering a healthy return on investment to its loyal backers of at least 25 per cent, increasing to 40 per cent if 40 per cent of subscribers give Woosh their telephone business. The figure may go higher if Woosh can establish a successful toll-bypass calling service.

"The cost structure of Woosh's network is very capital efficient and even with only broadband services offered, can prove economic at modest penetrations," the documents say. "The network could pay for itself with a 5 to 10 per cent share of the business broadband market in 2008."

Woosh's business model revolves around supplying high-speed internet and IP (internet protocol) voice calls over one wireless modem, largely independent of Telecom's network.

The documents adds that the initial investment put in by Woosh's backers could break even after four years "and at seven years a solid [earnings before interest and tax] stream has been established, which could credibly be sold to realise capital gains".

Woosh has launched wireless high-speed internet deals in parts of Auckland and Southland and is expanding coverage, base station by base station in both areas. It now has nearly 50 sites, mostly in Auckland.

The documents give Woosh a "potential" 15 per cent market share of the 380,000 strong broadband subscriber market in 2008.

The figures paint a positive picture for Woosh, should it stick to aggressive goals on national coverage for high-speed internet and voice.

This may have weighed on commissioner Douglas Webb in his decision to water down a recommendation on opening access to Telecom's local loop.

Inglis and Woosh managing director Bob Smith are understood to have presented a propelling case to the commissioner against unbundling.

"So, for example, a toll call from Te Anau to Invercargill is tariffed at 50c. On the Woosh network it will be a free local call. If that's not competition, I would like to know what is," Inglis told an unbundling conference in Wellington in November.

Woosh Wireless

* Offers a high-speed wireless internet service

* Costs from $65 a month, plus modem - at present $200

* Available Auckland and Invercargill

* Expansion planned in Wellington and Christchurch this year

* Voice telephone service planned in two months