GDC coy on return from big punt in data market

By PETER GRIFFIN

Listed telecoms contractor GDC Communications is looking to the crowded data market for growth but is keeping quiet on the progress of its big bet in the field, applications service iVASP.

GDC has sunk more than $8 million into the development of iVASP, which provides software applications, remote management and diagnostics for telecoms and data networks, but has yet to disclose how much revenue the service has produced.

GDC's management told shareholders at the annual meeting in Auckland yesterday that "a variety of technical and other difficulties" were experienced with iVASP in the first half of last year.

The iVASP prototype had been refined to support more software applications and monthly profits were expected to flow from iVASP from the third quarter this year.

Managing director Paul Honnor said GDC was one of the more advanced operators despite a prevalence of data network vendors working in the same market as iVASP.

"[From talks] with Microsoft, we are a year ahead in the market," he said.

Despite a move to diversify, telecoms cabling and network maintenance continue to provide the lion's share of GDC's revenue.

GDC reported an after-tax profit of $3.5 million on revenue of $68.7 million for last year.

The telecoms contracting arm generated $42 million in revenue. Income from telecoms and IT services, including iVASP, was $25 million.

Management described a "sinking lid" on Telecom's contracting rates which was affecting contractors.

GDC controlled seven of the 34 "patches" or regional areas of Telecom's network.

Downers, Alstom and Cabletalk controlled the rest.

All of GDC's contracts with Telecom are to be reviewed in the next year and the company hopes to have them renewed.

Chairman Stuart Johnston said he expected profit for the half-year to be around the same level of last year, at $1.5 million.

Johnstone put the 37 per cent decline in GDC's share price since its last annual meeting down to weakness in IT and telecoms stocks, a reluctance of institutional investors to add to their portfolios in the sector, a profit downgrade by a contracting competitor and the lack of announced results from iVASP.

He said GDC had outperformed existing IT stocks such as Advantage, IT Capital and Rocom despite shareholders having faced a big decline in share value.

"All of these declines were of greater magnitude than GDC's except for Telecom, which declined by 14 per cent."