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Competitive telco market hurts Newcall

By Phil Boeyen, ShareChat Business News Editor

Wednesday 30th August 2000

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Newcall says its half-year loss of $4.256 million is reasonable considering the competitive telco market, and its growth initiatives in New Zealand and in Singapore.

The result, for the six months to the end of June, was on turnover of $8.016 million.

MD, Norman Nicholls, says despite the group's subsidiary, Newcall Communications, increasing its customer base from 13,200 to 24,300 since December last year, the increasingly contestable telecommunications environment had resulted in lower pricing and lower gross margins.

He says the company recognises that it has to provide its mainly business market customers with a greater range of products and services and is actively pursuing the marketing of a package of products that included tolls, the internet and electricity.

The distribution of the package will be focused on the main centres where NGL's internet service, Iprolink, and its electricity reseller, Energy Online, have points of presence and supply.

Newcall paid $3.6 million for 100% of Iprolink, and $600,000 for 75% of Energy Online for $600,000.

Mr Nicholls says Iprolink's future strategy was one of further expansion while EOL was showing strong growth having picked up 6,000 new customers since April and had a target of 17,000 by December this year. Nevertheless the company would operate at a loss until the first quarter of 2001.

Offshore Newcall is about to start operating in Singapore where it has a Services Based Operating Licence, and an application for a Facilities Based Operating Licence was pending.

"With both of these licences, Newcall will be able to offer a full range of products from telephone and toll services through calling cards and internet services," Mr Nicholls says.

He says the company will be undertaking a capital raising in the next few months to fund current operations and grow profitability.

No dividend has been declared.

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