By Richard Braddell
WELLINGTON - Cable television and residential phone network operator Saturn Communications will get around $100 million in proceeds from the float of its new Australian parent, Austar United, to fund expansion outside the Wellington region.
Austar expects to raise between $A369 million and $A423 million in a public offering,
equal to 22.5 per cent of the post-float equity, unveiled in Sydney yesterday, with potential to raise 15 per cent more under an over-allotment provision.
Although the float will be promoted to Wellington institutions later this week, it is primarily aimed at the Australian investor market.
Austar's chief executive, John Porter, said Saturn's expansion into centres such as Auckland and Christchurch would be more straightforward and cheaper than the Wellington rollout, since administration overheads would be shared, interconnection and programming agreements were in place and the "telehousing" of Internet services had been completed.
But Saturn has officially deferred expansion after the $240 million Wellington rollout out of dissatisfaction that alleged unfair pricing tactics by Telecom were granted official sanction when Saturn began service in Wellington last year.
Mr Porter said proposed changes to the Commerce Act lowering the threshold for anti-competitive breaches would give Austar the comfort for further expansion, particularly given Saturn's rapid penetration of 23 per cent of the "connectable" homes in its first 12 months.
He said Saturn would be profitable on an earnings before interest, tax, depreciation and amortisation basis by next year, although that level of profitability would be delayed six to nine months if expansion went ahead elsewhere. "There's a lot of pent-up demand in New Zealand for a company that does what we do in providing a dynamic discounted bundle," he said, adding that the $93 a month Saturn was taking per household was an "outstanding result".
