Cabletalk merger valuation under scrutiny

By PAUL PANCKHURST

Questions linger over a PricewaterhouseCoopers valuation in 2001 that led to three telecoms services companies being rolled together in the listed Cabletalk Group.

At Cabletalk's annual meeting in Remuera yesterday, director Sir Selwyn Cushing said an independent report commissioned last year by Cabletalk had questioned the accuracy of the valuation.

Cabletalk was discussing the issue with the accounting firm.

The question of PricewaterhouseCoopers' role was raised from the floor at the sparsely attended - by 25 people - meeting as a flow-on from a settlement with the vendors of Astute Network Services.

In the key part of the settlement, the vendors in March surrendered more than 4.5 million shares in Cabletalk - a stake valued at more than $1.1 million - that they received as part of the purchase.

Cabletalk had previously reported receiving independent financial advice that a challenge of "several million dollars of the purchase price" was warranted.

In 2001, PricewaterhouseCoopers valued the three companies - Cabletalk, Astute Network Services, and McBreen Jenkins Telecommunications - at $14.2 million to $16 million as a merged entity.

Cabletalk, based in Takanini, maintains and repairs telecommunications systems, employs 365 staff, and relies on Telecom as its biggest client.

Managing director Peter Wilson told the meeting that a strong performance in the second half of the last financial year had flowed through to the first three months of this one.

Last year's bottom-line result was a loss of $11.7 million after a big writedown of goodwill.