Telco company Newcall has sold its ISP Iprolink and its phone company user database. It is getting out of telecommunications in New Zealand because government initiatives to restructure the industry are too little too late.
Newcall will retain only its electricity retail arm, Energy Online, in New Zealand and will continue with its telecommunications operations in South East Asia.
“The new regulations are poppycock,” says Newcall group managing director James Bracknell, in New Zealand for the company AGM. “Really we should have got out of the New Zealand market three or four months ago, but we wanted to wait and see what the new regulations brought and frankly it’s not enough.”
The Newcall group was created when Newcall Communications merged with NZ Salmon in 1999. Its main aim was to provide competitive tolls for small to medium-sized enterprises. The company bought Iprolink for a reported $3.6 million in the same year. It is now rumoured to be worth closer to $1.5 million.
“[This week] we sold our business customer base to TelstraSaturn and the rest of our customers to Clear. Without the phone business there was no strategic link to the ISP so we sold that as well.” Bracknell says that in order to grow, an internet-based business needs a capital injection and without the strategic need for an ISP he wasn’t prepared to do that. New owners, PCL Internet International, are reportedly keen on developing Iprolink as a local merchant hub.
“PCL is a London based internet company that develops trading portals city-by-city. They go to high street merchants and take them online.“
But Bracknell saves most of his venom for Telecom and the New Zealand regulatory regime.
“It’s too late for Newcall. I don’t think we would come back into the market. In Singapore when we sign up a customer tomorrow that customer is ours and we get 100% of the revenue from that account.” In New Zealand the process is far more cumbersome, says Bracknell.
“Here it takes four to six weeks, it’s very contentious - almost a dog fight to get that customer away - and at the end of the day we get at best 40% and that has a margin of about 15%. It’s a totally different animal here.”
Bracknell says any telco that wants to compete in the New Zealand market must be “highly litigious” and that’s not something he wanted to be.