Torotoro Waea rescues publicly funded network

Smartlinx 3, whose shareholders include the Hutt, Upper Hutt and Porirua city councils, receives a much-needed capital injection

Maori broadband investment group Torotoro Waea has injected much-needed capital into financially struggling Smartlinx 3, which will give it a controlling interest in the company.

Smartlinx 3 was set up seven years ago to provide open, competitive, high-bandwidth telecommunications infrastructure for Porirua and the Hutt Valley. Its constitution states this will be available to the communities and cities within the jurisdiction of a council to create economic and social opportunities for those communities.

Shareholders include Hutt City Council, Porirua City Council, Upper Hutt City Council, Hutt Mana Charity Trust Holdings and a number of private investors. In 2006, the company was awarded $2.4 million under the then government’s broadband challenge.

The 2010 Smartlinx 3 annual report shows a net deficit for the year of $668,491, following a previous-year deficit of $449,333. Accumulated losses at July 1, 2010, were $1,668,580 ($1,217,247). Sales in 2010 totalled $386,269 ($425,374).

There appears to have been no capital investment that year despite the continued government funding.

Fifteen directors have resigned from the company since its inception. Computerworld has been told they have almost all cited inadequate information to carry out their director duties.

Some shareholders, collectively, owe around $165,000 for unpaid shares.

Smartlinx 3 has a $500,000 revolving credit facility with South Canterbury Finance, which is due for repayment in October. The company also has large debts with two suppliers, though one is in partial dispute.

Torotoro Waea is a limited partnership. DataLight, which acts as the general partner for Torotoro Waea, will manage and operate the Smartlinx 3 network. As a registered telecommunications operator, it had earlier acted for the Maori group in its unsuccessful bid for the rural broadband initiative.

Computerworld understands Torotoro Waea was approached by directors of Smartlinx 3, seeking investment. A meeting of shareholders last week approved the capital injection and the subsequent re-ordering of shares.

DataLight director Roger MacDonald is not willing to comment in detail until documents have been exchanged and legal details settled.

He says the deal aligns almost perfectly with the regional outcomes Torotoro Waea is trying to achieve. “It is almost a perfect match.”

He confirms that Torotoro Waea has “national intentions”.

“Our longer-term vision [with Smartlinx 3] is to do something in the greater Wellington region,” he says.

No defined time has been set for DataLight to take over the running of the network.

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