Singapore market has promise for Newcall

By RICHARD BRADDELL

WELLINGTON - Newcall Communications, a telecommunications reseller that listed through a reverse takeover of New Zealand Salmon last year, expects to break even this year and turn a profit next year.

Six weeks ago the company was granted one of 10 licences to compete in the newly deregulated Singapore market, and has applied for a further licence.

Chief executive Norman Nicholls said the issue of further shares to finance its Singapore expansion was being considered.

The Singapore market held great promise, he said, as it was at the same state of deregulation as New Zealand was a decade ago.

Newcall's Singapore offshoot is likely to call on investment of about $8 million - roughly the same as in New Zealand.

Speaking at the company's annual meeting in Wellington, Mr Nicholls said the potential offered by impending deregulation of the Asian telecommunications market had first attracted Newcall's chairman, David Sun, to invest in New Zealand in a strategy of capturing knowledge and expertise that could then be applied in Asian markets.

But while Newcall would provide knowledge and software to kick-start the Singapore business, it would quickly operate with predominantly Singaporean staff.

Meanwhile, the company sees no shortage of future expansion opportunities.

Bangkok-based director Jim Bracknell said an investment had to be self-funding, meeting a hurdle rate of return of 20 per cent.

A takeover target also had to have a competent management team, because Newcall did not want to overstretch its own small management team.

In New Zealand, Newcall initially built its business around selling long-distance services to small and medium-sized businesses.

Recognising that toll margins had become squeezed, Mr Nicholls said a rapidly growing customer base of 20,000 provided a solid platform for selling other higher-margin services.

Late last year, Newcall became the first telephone company to resell Telecom's mobile, and soon after that it took over internet provider Iprolink.

In February, it bought a "significant" block of small-to-medium business customers from Telstra, which had decided to focus on the corporate market.

It has become an energy reseller through a 75 per cent stake in Energy Options.

With more than 70 staff, the company is bundling services, with high margin offerings making up for the toll business.