4RF confident after major investment

By PETER GRIFFIN

Wireless communications company 4RF has secured the cash needed to see it through to break-even with an $8 million injection of funds, largely from Australian private equity fund manager Carnegie Wylie.

The Wellington developer of wireless radio equipment for mobile radio, trunking and cellular networks generates only about 5 per cent of its revenue here but has customers around the world ranging from the Slovenian police, the United Nations and Telecom Fiji.

4RF's chief executive, Grant Dow, who joined in August, said the company had been generating revenue for 20 months and expected to be profitable by the middle of 2005.

4RF is run by ex-employees of MAS Technology, the company formed by entrepreneur Neville Jordan, which went on to list on the Nasdaq and was bought in 1998 by Stratex Networks for US$110 million ($171 million).

It has 55 employees and carries out all its research and product development in Wellington, where Dow, a veteran of MAS and Stratex, said it enjoyed a cost structure far below that of companies in wireless development hotspots in California and Israel.

"It costs them as much investment again to get to where we're at and their return on equity is three to five times longer," he said.

In March, energy company-cum-private investor Orion increased its stake in 4RF by $3.6 million to $17 million. It has been a key investor in 4RF since 2001.

Existing management have boosted their stakes in the latest funding round, but Carnegie Wylie has put in most of the money. The new shareholdings have not been disclosed.

Carnegie Wylie manages investments around the world through two funds, one A$125 million ($142 million) in size, the other US$20 million.

It had come across 4RF through that company's chairman, former Telecom boss Peter Troughton.

"We've been through their business plan top to bottom and we think it's very good," said Carnegie Wylie principal and co-owner John Wylie.

4RF is one of several companies yet to enter the black who are contributing to wireless networks with technology capable of delivering voice and data "point to point" over large distances.

Although equipment makers such as Airspan, Remec and IP Wireless have emerged in New Zealand, mainly through the Government-funded Project Probe broadband initiatives, 4RF made core infrastructure, so was less visible.

Nevertheless, Dow said the company was involved in most of the Probe wireless projects in some capacity.