Woosh Wireless plunges to record loss of $38m

Wireless pioneer plunges into negative equity

Woosh Wireless has plunged into negative equity after posting a record loss of $38.3 million.

The result, for the year to June, left the pioneering wireless broadband firm with liabilities exceeding its assets by $12.4m. Revenues were up by less than 2 percent at $16.9m. Directors wrote down the value of its network by $22.3 million.

Woosh provides wireless broadband and phone services to about 26,000 customers using a network of base stations in Auckland, Wellington, Christchurch and Southland.

Directors said in a statement accompanying the accounts that there was a reasonable expectation Woosh would keep trading for at least another year with additional support from its largest shareholder, the Kuwait Finance House.

Woosh chairman Rod Inglis said in February that the Kuwait Finance House was "nearing the end of its investment mandate" and the company would need to seek fresh investors.

Woosh had entered the wireless broadband market too early, he said, but the industry was "gathering momentum all the time".

Inglis said the network write-down could be reversed if Woosh was able to use its towers to launch a broadband service based on newer WiMax technology or a 4G mobile service, which would make its base stations more valuable.

Inglis said Woosh had maintained a "modestly positive cashflow performance, month on month" since March last year. "I don't think there is any issue about solvency at all."

Its accounts showed a net outflow of cash from operating activities for the year to June of $1.7 million, and an overall net outflow of $667,000. That was despite Woosh cutting its staff costs by 30 percent to $5.7 million and slashing its marketing and promotion expenses by 55 percent to $1.7 million.

IDC Research analyst Rosalie Nelson said Woosh had what was once a leading-edge network, but was now caught between a rock and a hard place.

"They need to be able to somehow generate the capital to upgrade, but they have always wanted to do that on a national basis. They have suggested they have been very close to signing deals on this in the past, but nothing has eventuated for them."

Woosh had a considerable amount of real estate in its towers, she said, "but how does it keep operating and carry those overheads while at the same time trying to generate the kind of capital that will justify investment? It is a really tough one for the business. They need a white knight and it is really unclear who that might be."

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