By PETER GRIFFIN telecoms writer
Selling toll-free phone services and telecommunications equipment is proving increasingly profitable for Auckland company Zintel, which forecasts a $4.9 million pre-tax profit for the year ending March 31.
A "virtual" network operator, Zintel has not sunk investment into infrastructure, instead reselling toll-free calling minutes it buys from network operators across New Zealand and Australia to businesses and acting as an importer of Ericsson telephone switches.
Zintel's forecast turnover for the year is $35 million with ebitda (earnings before interest, tax, depreciation and amortisation) of $5.35 million - up 67 per cent on the previous year.
Managing director Nick Gordon said Zintel's profitability sprang from its low cost structure.
"We don't own any network infrastructure so we don't have that high capital cost.
"We run a very lean, mean ship."
Shareholders Gordon and fellow director Evan Christian also sit on the board of listed IT company Advantage Group.
About 100 Zintel shareholders will look forward to a full-year dividend from the company, the size of which is yet to be decided.
Zintel, which has 90 staff, was buying about 10 million minutes a month to resell to its customers, said Gordon.
It sold 0800 toll-free minutes to businesses in New Zealand and 1-800 minutes to Australian businesses.
Zintel did not undercut bigger competitors such as Telecom, he said, but provided add-on billing and traffic-monitoring services.
The Ericsson business was experiencing rapid growth, but the real opportunity for Zintel lay in Australia, where it had been doing toll-free business since September 2000.
"A lot of operators are finding they can support toll-free platforms in Australia and take market share from Telstra," said Gordon.
"Ultimately, Zintel's going to be bigger in Australia than it is in New Zealand."
With its shares listed on the secondary board, Zintel was planning a full stock exchange listing.
Gordon was a member of a working party on the structure of the "AX" - or alternative exchange - which is expected to be put in place towards the end of the year.
"The AX is a good move because it brings the unlisted securities market and the new capital market together," he said.
"We may be too big for the AX and go directly to the main board."
Lean, mean Zintel looks at $4.9 million profit
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