Newcall pulls plug on NZ

By RICHARD BRADDELL telecoms writer

Newcall Communications has blamed a fiercely competitive market and an unsupportive regulatory framework for its withdrawal from New Zealand's telecommunications market.

With the exception of its internet service provider Iprolink, Newcall has quit all its telecommunications activities with the sale yesterday of more than 12,000 smaller business and residential long distance customers to Clear Communications.

The deal follows the sale of 5500 larger business customers to TelstraSaturn in January.

Newcall's chief executive officer, Guy Pierce, said the end of the line came before Christmas with the Government's telecommunications policy.

This offered little for niche operators dependent on other carriers' networks, he said.

"The pricing model in telecommunications has changed dramatically in the last 18 months with significant price cutting that favours only the consumer and those who can control and own the network or networks," Mr Pierce said.

Contracts were ready for the sale of Iprolink, a business market-oriented ISP Newcall bought for $3.6 million a year ago.

Mr Pierce agreed that the Government's policy was a clear signal in favour of alternative infrastructure, but said it offered nothing for small independent operators who needed direct access to Telecom's lines if they were to succeed.

"If we continued in the telephone business it was going to cost $7 million. Who's going to put in $7 million if the cashflow is going to be negative?"

He said one competitor was offering calls at 8c a minute, when it was costing Newcall 15c.

Clear, which at one point appeared ambivalent about the long distance market, made an unambiguous return to the market last October with the launch of its discount toll operator, Ztalk.

The renewed attack was made possible by a surplus of call minutes that became available under Clear's revised interconnection agreement with Telecom.

Mr Pierce said financial details of the transaction with Clear would be released to Newcall shareholders for their approval at the annual meeting next month.

While the Clear sale came into force yesterday, he said Newcall shareholder approval was a foregone conclusion since five shareholders held 70 per cent of the capital.

Newcall would now concentrate on its Singapore telecommunications activities.