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GDC expands Telecom contracts

By Phil Boeyen, ShareChat Business News Editor

Monday 18th December 2000

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GDC Communications (NZSE: GDC) is spending $2.9 million to grow its Telecom (NZSE: TEL) patch contract business.

The listed communications and tech company will take over the Dynamic Communications' contracts for Auckland central, Horowhenua and Canterbury north, which had revenue of over $7.5 million for the six months to the end of September.

GDC will offer employment to the 130 Dynamic employees currently employed in the business and will acquire the businesses inventory and vehicles of the company but not the Dynamic name or any of the company's premises or administration functions.

The purchase means that from February GDC will manage seven of the 34 Telecom patch contracts covering all of the country. All seven contracts are for three years from various dates between August 1999 and April 2000.

GDC says substantial economies and efficiencies are anticipated through the sharing of facilities and resources across the seven patches.

The $2.9 million price tag represents inventory and fixed assets of around $1 million and goodwill of $2 million, less approximately $100,000 of employee-related liabilities.

The transaction is conditional upon the consent of Telecom to the transfer of the three contracts.

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