Woosh full-year result expected in black

Rod Inglis. Photo / Martin Sykes

Wireless telecommunications company Woosh is expected to show a modest profit of around $170,000 when it releases its annual results in the coming weeks.

Company founder and chairman Rod Inglis said that at an operating cashflow level the company has been profitable for almost 12 months.

This is a reversal of previous years which have seen the company's balance sheet bleed red as it tried to establish itself as a wireless broadband operator.

The company turned a profit for the first time in the second half of its financial year, a trend which has continued, said Inglis. Intensive cost- cutting, including shedding management staff, a favourable deal for traditional DSL broadband from Telecom Wholesale and acquiring customers more efficiently has all contributed to the turnaround, he said.

The company has stumbled on its way to becoming a wireless broadband provider, backing a technology choice - TDD CDMA - which has been eclipsed by WiMAX, akin to VHS winning out over the alternative Beta video format in the '80s.

"I think the ambition we've got is to deliver on the wireless broadband promise that we said we would," said Inglis. The planning and modelling for the new wireless broadband network using WiMAX technology had been done and the company would begin building in the next 12 months.

Woosh is likely to begin by converting its existing Auckland, Wellington, Christchurch and Southland network areas to WiMAX and sites for cell towers have been acquired and given consent in Hamilton.

Inglis said the Government-backed fibre roll-out presented some real opportunities for the company.

"I think fibre and wireless are very complementary," said Inglis.

He points to Japan, a country with an extensive fibre network and 3G mobile, which is building a WiMAX network to cover most of the country.

Inglis said the first move by Woosh into wireless broadband was too early, but the demand had not gone away.

"We have had a lot of experience now. We know customer usage patterns, we know what pricing plans work and we know where the risks are, so we're reasonably confident we can leverage off our experience and existing infrastructure."

Rural areas and provincial towns were particularly suited to wireless broadband, he said, in that wireless broadband could be provided at a fraction of a cost of running fibre to the premises.

"We don't believe one thing will win," said Inglis. "It will be a mix of solutions to meet what customers want to pay for and the functionality they want."

In a submission to the Ministry for Economic Development on the Government's rural broadband initiative, Woosh said adding wireless broadband into the mix could deliver higher speed internet connections to 97 per cent of the population within three to five years at a cost of $300 million.

The Government plan is to spend $300 million delivering ultrafast broadband to 97 per cent of rural schools using fibre only.

Cash to fund the WiMAX network build expected from cornerstone shareholder Kuwait Finance House has failed to eventuate.

"We've got a number of options around funding which we're working through and they've all got different nuances," said Inglis.

The New Zealand Australian Private Equity Fund - underwritten by the Kuwait Finance House - has a 37 per cent stake in the company but is at the end of its seven-year investment window. New funding would mean changes in the company shareholding and at board level, said Inglis.

Also in the WiMAX game is Compass Communications which began a WiMax option in September, offering speeds of one to two megabits a second for residents in some areas of Auckland, Hamilton, Rotorua, Tauranga, Palmerston North and Christchurch.

CallPlus also has a WiMAX network in Whangarei with plans to extend coverage to Auckland this year.

With an existing network of cellsites that can be easily converted to the new technology, Inglis is quietly confident Woosh has the edge.

"I'd hate to start from scratch," he said. "Even from where we are, it's serious money."

WIRELESS WISH

* Woosh says wireless broadband could deliver higher speed internet connections to 97 per cent of the population within three to five years at a cost of $300 million.

* The Government plan is to spend $300 million delivering ultrafast broadband to 97 per cent of rural schools using fibre only.