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Bill Bennett


Orcon sale underlines New Zealand’s telecommunications shakedown

New Zealand’s telecommunications shakedown continues with Orcon’s sale to Vivid Networks.

The government wading into the telecommunications business by sponsoring the UFB fibre-to-the-home network was always going to trigger change. Did anyone making those decisions expect it to be this fast and this dramatic?

Let’s run a quick ruler over the state of New Zealand’s telecommunications sector:

Telecom NZ: Formerly the largest telco by a country mile is still reeling from the Chorus demerger. The company lost 300 workers last year and plans to sack another 1200 in the coming weeks. Telecom’s Gen-i business unit recently did a part-retreat from Australia.

Vodafone: Integrating TelstraClear is like a python swallowing a lamb. Vodafone may digest the meal, but we will see hiccups as the dinner goes down. Acquisitions on this scale take years to bed down.

2degrees: Eric Hertz will be a hard act to follow.

Kordia: Selling Orcon makes sense for government-owned Kordia. Although no-one is talking about the sale price, the company should earn a premium on the $24 million it paid for Orcon in 2007. Kordia is now free to focus on the business-to-business services it is best at while the new owners have control of the most successful residential fibre service providers.

Chorus: Faces Commerce Commission moves to cut the price telcos pay for copper network access. While the government appears to be moving to change the law and the Commerce Commission mandate to shore-up Chorus’ business model, question marks remain.



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