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TeamTalk's mobile radio business to fund promising sectors' growth

Tuesday 24th November 2009

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TeamTalk Ltd, New Zealand’s largest mobile radio company, is looking for other related areas of its business to provide future growth. 

The listed Wellington-based technology provider said mobile radio is a mature industry, whose cash-generation will provide the financial backing to expand its fibre optic installation and services, mobile data and vehicle tracking, and wireless broadband technologies. In August the company reported a $3.8 million profit on revenues of just over $31 million.

The company’s future prospects are also aligned to the government’s $1.5 billion ultrafast broadband initiative, and whether it becomes a preferred partner to regionally replicate its current Wellington and Auckland CBD CityLink broadband network. 

“How big that becomes or how profitable will have to wait till next year to see how the government’s intentions pan out,” said TeamTalk chief executive David Ware. “Until then it’s business as usual, and they’ve too many more decisions to make before we can make any announcements.” 

TeamTalk’s mobile data and vehicle tracking business is an area that has “a lot of promise but not a lot of profit,” Ware said. Having gained a strong understanding of transport and courier companies, and particularly their drivers after 15 years in mobile radio, mobile data and vehicle tracking is a natural fit. 

An example is a rural livestock delivery company that has been able to pay for TeamTalk’s tracking information and reports through saved road user charges, by being able to prove that part of a truck’s mileage that occurred on-farm. Another part of the vehicle tracking and data package can monitor a driver’s engine management; the difference between a good and bad driver worth $15,000 a year. 

“A lot of people entered this geospatial territory, and a lot of them had rubbish products,” Ware said. “That causes a flow-on effect; transport companies become distrustful of their benefit, and because they’re working with wafer-thin margins, the minimal price they paid has a minimal service, which in turn confirms their theory that it is the work of the devil.” 

He said that through an understanding of how truck drivers think and operate, TeamTalk has been able to design specific solutions in conjunction with its software designers Xlerate. 

“We figure there’s a lot of prospects and possibilities; the market’s nowhere saturated,” said Ware. 

TeamTalk is also providing wireless broadband services across the country through its Araneo subsidiary, not only as the main link for rural-based industry but also as a back-up to city businesses fibre-optic internet links. 

Landcorp, the state-owned farming company, for example has all its ear-tagged dairy cows wirelessly linked back to Wellington headquarters whenever they enter milking sheds from Northland to Southland. Real time generated information from milk quantity and quality to cow health means that decisions on that animal can be made instantly he said. 

“There are really big markets there that are untapped,” Ware said. “Araneo has more orders than it can fill, the challenge for us is to get enough decent radio frequency engineers.” 

TeamTalk intends growing the business to a $40 million turnover business in the next three to five years while maintaining its present margins he said. The shares last traded at $2.29 and have climbed more than 20% this year.

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