Wires crossed after E-Phone sale

By MICHAEL FOREMAN

A row is simmering between E-Phone and two of its former distributors as a result of the company selling its discount phone card business.

Robin Oliver, managing director of Takanashi Global Connexions, and John Donaldson of Celtic Holdings, said they were considering legal action against E-Phone for breach of contract after it disposed of the card business last year.

Mr Oliver and Mr Donaldson were both engaged in developing retail outlets for E-Phone's pre-paid phone cards.

These allowed customers to make discount national and international calls through the use of internet technology.

E-Phone acquired the phone card business from Uunet-owned internet service provider Voyager in January last year, but onsold the business in November to rival operator Net-Tel.

Mr Oliver said he was seeking at least $400,000 in damages because, he alleged, E-Phone had transferred retail outlets developed by Takanashi to Net-Tel without compensation.

Mr Donaldson said that he was considering taking similar action.

"I turned up at a meeting to find [E-Phone] had sold my business contacts to Net-Tel with no compensation and no notification."

Mr Donaldson, who bought 20,000 E-Phone shares at 49c each last year, said he was also concerned that E-Phone had sold the phone card business without notifying shareholders.

"As a shareholder they did not notify me of their intention to sell two-thirds of the business [to Net Tel]," he said.

But other former E-Phone distributors contacted by the Herald said they believed that the complaints by Mr Oliver and Mr Donaldson were misplaced. "I found [E-Phone] pretty good to work with if you played by the rules," said Geoff Chard of Rotorua-based Citifone Connections.

Despite losing business as a result of the sale, Mr Chard said he had no hard feelings against E-Phone and he had recently bought shares in the company.

A former distributor now working for Net-Tel, who did not wish to be named, said E-Phone had treated all distributors "fairly and squarely."

E-Phone chief executive Bob Barraket said Mr Oliver had been a sub-distributor only, with no direct relationship with E-Phone. Mr Donaldson's distribution agreement had been properly terminated according to his contract with the firm.

Mr Barraket said there had been "no need" to inform Mr Donaldson of the sale of the phone card business to Net-Tel, even though he was a shareholder.