Kordia in discussions with Crown over its future
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State owned telecommunications company Kordia is undergoing a strategic review
By Sarah Putt | Auckland | Wednesday, 1 August, 2012 | 4 Comments
State owned telecommunications company Kordia is undergoing a strategic review, with the findings expected to be made public later this year.
CEO Geoff Hunt said he would not comment publicly on the review until it was “bedded in” with management and staff, a process which is not expected to be completed until September.
Kordia, originally the transmission arm of Television New Zealand, became a state owned enterprise in 2003. In 2006 it embarked on a “broadcast to broadband” strategy as its primary income was under threat with the switch off of analogue television, due for completion in 2013.
As part of this strategy Kordia embarked on a plan to build a trans-Tasman cable in a project called OptiKor. In January Kordia announced that Axin and Huawei Marine (two Chinese-owned technology companies) are now leading the project.
Kordia also bought the internet service provider Orcon in 2007 for $24.3 million. Orcon is the first of the five largest ISPs in New Zealand to launch Ultra Fast Broadband services. According to Kordia’s half year results to December 2011, Orcon’s VoIP product Genius (which is UFB enabled) achieved its full year sales targets in just two months.
The half year results also show Kordia achieved a net profit after tax of $7.3 million, compared to a loss in the same period last year of $18.01 million. Kordia declared an interim dividend of $1 million in February and has forecast a total dividend of $2 million at the end of the financial year.
The half year results note that 60 percent of Kordia’s revenue is being derived from services that did not exist five years ago.
Kordia board member Rhoda Phillippo says the SOE is in discussions with the Crown about the strategic future of Kordia.
“From our perspective making the right decision in the telecommunications/ISP market, you have to be very aware of the economic environment both in Australia and New Zealand,” she says.
“It’s not just strategically reviewing the business and analogue switch off, it’s reviewing what context you are in, who’s changing, who’s moving and shaping and where would you fit into it. I think it will be carefully considered. There’s no rush to sell off the crown jewels in any way shape or form, (it’s) much more a board deciding strategically what is the right move for Kordia in the future.”
Comments
Missed Opportunities
Kordia could have been the shared infrastructure company of New Zealand's wireless ecosystem - as dominant and profitable player as Chorus is set to be on the fixed line side of things.
Instead of sticking to its core business of maintaining towers and transmission to a high standard, it attempted to grab everything it could. Gallingly, in almost all the cases of their numerous commercial failures, they went head to head with their existing infrastructure and wholesale services customers instead of cooperating with them. And they did so with appalling personal and organizational arrogance.
So, the bigger failures:
* Metro Wi-Fi network that didn't meet the needs of its users
* Rural wireless product that had massive functional issues
* Metro wireless Ethernet product that was expensive and based on dated technology
* The KorKor network - inferior coverage to TeamTalk and inferior technology to Telecom's XT.
* AIS network - too little, too late, and too expensive for many harbourmasters and port companies
* OptiKor - might have done well but since handed off to Axin, a secretive shell company hiding secretive investors
* A strident bid for the government's Rural Broadband Initiative that had them partner with Woosh and FX, which featured unbelievable technological claims
Aside from DTV (and remind me who paid for that) where have they headed in the right direction?
* Offshore contracts - bringing cash back to NZ. Nice work.
* OnKor Wide Area Network Services - a technically excellent product taking advantage of fibre rights held from the Clear days and a microwave network built to move television broadcasts around - complimentary to Orcon
* Odyssey - control international transit and you can provide QoS to your customers - nice long term partner to Orcon
* Orcon - a real competitor in the market, but are Kordia committed to it long term?
Keeping in mind that Onkor and Orcon compete against Kordia's wholesale clients, and Odyssey is most useful as a part of that ecosystem, here's some strategy:
1. Package Orcon, Oncor, and Odyssey up & divest them. Stop competing with the best potential customers of your huge (and maybe overvalued) asset base.
2. Go to Vodafone, Telecom, & 2degrees, JDA, local councils, and other tower owners, hat in hand, and say "hey guys, we know we screwed this up a few years ago, but from now on how about we start working together on tower and transmission infrastructure. Oh, and LTE with its 700MHz rural towers and high density 2500MHz urban microcell requirements might be a great time to start"
That would be a good day for New Zealand.
Posted by @kiwibrew at 10:42:03 on August 1, 2012
Instead of sticking to its core business of maintaining towers and transmission to a high standard, it attempted to grab everything it could. Gallingly, in almost all the cases of their numerous commercial failures, they went head to head with their existing infrastructure and wholesale services customers instead of cooperating with them. And they did so with appalling personal and organizational arrogance.
So, the bigger failures:
* Metro Wi-Fi network that didn't meet the needs of its users
* Rural wireless product that had massive functional issues
* Metro wireless Ethernet product that was expensive and based on dated technology
* The KorKor network - inferior coverage to TeamTalk and inferior technology to Telecom's XT.
* AIS network - too little, too late, and too expensive for many harbourmasters and port companies
* OptiKor - might have done well but since handed off to Axin, a secretive shell company hiding secretive investors
* A strident bid for the government's Rural Broadband Initiative that had them partner with Woosh and FX, which featured unbelievable technological claims
Aside from DTV (and remind me who paid for that) where have they headed in the right direction?
* Offshore contracts - bringing cash back to NZ. Nice work.
* OnKor Wide Area Network Services - a technically excellent product taking advantage of fibre rights held from the Clear days and a microwave network built to move television broadcasts around - complimentary to Orcon
* Odyssey - control international transit and you can provide QoS to your customers - nice long term partner to Orcon
* Orcon - a real competitor in the market, but are Kordia committed to it long term?
Keeping in mind that Onkor and Orcon compete against Kordia's wholesale clients, and Odyssey is most useful as a part of that ecosystem, here's some strategy:
1. Package Orcon, Oncor, and Odyssey up & divest them. Stop competing with the best potential customers of your huge (and maybe overvalued) asset base.
2. Go to Vodafone, Telecom, & 2degrees, JDA, local councils, and other tower owners, hat in hand, and say "hey guys, we know we screwed this up a few years ago, but from now on how about we start working together on tower and transmission infrastructure. Oh, and LTE with its 700MHz rural towers and high density 2500MHz urban microcell requirements might be a great time to start"
That would be a good day for New Zealand.
Posted by @kiwibrew at 10:42:03 on August 1, 2012
Missed Opportunities
Interesting observations Jonathan - I agree with a lot of what you're saying.
Not sure about KorKor - not my area of expertise but I believe the advantage over XT comes by removing mass market subscribers from the network. Often in an emergency or major event cell networks become over subscribed and can have more regular power issues (they need more sites to provide sufficient capacity for their needs in dense areas and often these do not have backup power) so dedicated private trunk mobile networks can be the best place for key utilities and services to be in the case of these issue.
I don't really understand your comments about towers, that could be related to my lack of knowledge on the subject. I do know that a lot of effort goes into the industry working together to share tower infrastructure. Kordia works a lot with the companies you mention above to share towers and co-lo facilities.
Posted by Regan Hughes at 12:28:24 on August 1, 2012
Not sure about KorKor - not my area of expertise but I believe the advantage over XT comes by removing mass market subscribers from the network. Often in an emergency or major event cell networks become over subscribed and can have more regular power issues (they need more sites to provide sufficient capacity for their needs in dense areas and often these do not have backup power) so dedicated private trunk mobile networks can be the best place for key utilities and services to be in the case of these issue.
I don't really understand your comments about towers, that could be related to my lack of knowledge on the subject. I do know that a lot of effort goes into the industry working together to share tower infrastructure. Kordia works a lot with the companies you mention above to share towers and co-lo facilities.
Posted by Regan Hughes at 12:28:24 on August 1, 2012
Missed Opportunities
Regan if you have a look at the MED's license database you'll find the rate of co-siting of Telecom/Vodafone/2Degrees equipment on Kordia infrastructure is really low. And that's not surprising given some of the historic restrictions on use of Kordia towers, punative rates for multi-polarized antennas, etc.. I haven't seen the Kordia price book in a while, but certainly three years ago it was a far better bet to use a Chorus tower than it was to use a Kordia tower.
Posted by @kiwibrew at 16:22:10 on August 1, 2012
Posted by @kiwibrew at 16:22:10 on August 1, 2012
Missed Opportunities
I worked for XT and Kordia's attitude to placing equipment on towers drove a decision to move off all Kordia locations where possible. Every time the word Kordia came up, my PMs would roll their eyes and ready for delay, difficulty and a bleeding cheque book.
Korida has become a rabid dog, shoot it for the good of all.
Posted by Anonymous at 23:00:51 on August 3, 2012
Korida has become a rabid dog, shoot it for the good of all.
Posted by Anonymous at 23:00:51 on August 3, 2012
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