Kordia eyes mining deals across Ditch

Geoff Hunt says Kordia is competing for multimillion-dollar contracts to build networks for several Australian mines. Photo / Greg Bowker

State-owned telecommunications company Kordia is looking to offset the tumbling value of a New Zealand asset by expanding its business in Australia.

Kordia chief executive Geoff Hunt confirmed the company was vying for multimillion-dollar contracts to build telecommunications networks for several mines across the Ditch.

"Mine developments are generally multibillion. The large mines, especially the greenfield mines, have large telecommunication needs - they're almost like setting up a little city, with [spread-out computer networks], radio communications, cellphone communications and that's the exact type of work we see for our Australia business," Hunt said.

He said Kordia's moves in Australia were part of a strategy to offset the revenue the company would lose when free-to-air television moved from analogue to a digital broadcasting in September next year.

Because Kordia owns analogue spectrum, the switch will both devalue its assets and lead to a drop in revenue.

In anticipation of this move, Kordia posted a $20 million (after tax) asset write-off in its half-yearly results for the six months to December.

This put the company $18 million in the red - a position which Hunt hopes the Australia expansion could reverse.

Confidentiality deals meant Kordia was unable to reveal which mining companies it was in negotiations with.

"What I can say is that there are a number of opportunities in Australia that we are pursuing," Hunt said.

Kordia expanded its Australian operations in 2005 with the purchase of the Australian Associated Press Communications Services, a local infrastructure company.

"When we bought it, it had about a A$65 million [$87.7 million] turnover, it's now doing about a A$100 million turnover. Through it we're pursuing work on the [National Broadband Network], the mining sector and other significant networks," he said.

As well as vying for the mining deals, Kordia is still intent on building OptiKor, a telecommunications cable from Auckland to Sydney.

Although another company, Pacific Fibre, is also planning a transtasman cable, Hunt was "quietly confident" OptiKor would go ahead.

Kordia's expansion plans are in line with the Government's directives for state-owned companies to be more commercially viable.

In April 2009, the Government told SOE executives they were to improve their productivity and profits.