Listed mobile radio company TeamTalk has acquired 67% of CityLink, the metropolitan networking company, with CityLink management taking the rest in a buyout from its original private owner Ron Woodrow, who will exit the company.
TeamTalk is known to have been looking around for some time for a suitable investment to lift its rather flat market. CityLink fulfils the chief targets it had set for such an acquisition, says managing director David Ware: “We were looking for a profitable company with a proven business model and a good management team, a New Zealand focus and a strategy for growth.”
TeamTalk will bring capital and administrative expertise to help CityLink expand. This growth is likely to include setting up metropolitan networks in smaller cities, says CityLink managing director Neil de Wit. CityLink has moved into Christchurch in the past few weeks, adding to its extensive Wellington and smaller Auckland coverage.
With a government mood towards expansion of broadband networking and funds still available on the Broadband Challenge side of the government’s digital strategy, as well as developing “last-mile” opportunities for hooking into the Government Shared Network and the KAREN research and education network, such an expansion is particularly well-timed.
The success of the effort, however, is not dependent on any particular outcome from imminent government decisions on telecomms policy, say the two directors.
Actual overlap in areas of business is minimal, so there will be little or no shrinkage in staff, they say. Both companies are, however, in wi-fi: Citylink with CafeNet and TeamTalk with Araneo.
A new company, provisionally called Neuco, will be established, with de Wit as managing director. It will have equity of $2.5 million, in addition to which TeamTalk will lend Neuco $5m and will subscribe for $6m of convertible notes in Neuco.