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Cabletalk's clean slate wins approval

Friday 25th July 2003

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The doubling of Cabletalk's share price since its results announcement on June 5 suggests investors believe the company has put its troubled sharemarket debut behind it.

Cabletalk listed in November 2000 as a New Capital Markets company and graduated straight to the main board in 2001 when it completed the purchase of Cabletalk Astute Networks (CANS), a roll-up of three telecommunications network servicing companies, for $15.3 million in cash and shares.

A legal dispute with the vendors of one of those companies, Astute Ltd, over the purchase price was settled in March when the vendors gave back 4.5 million shares.

At the annual meeting this week Cabletalk said an independent report had questioned the key transaction valuation by PricewaterhouseCoopers and the company was "discussing" the issue with the beancounters.

Given that Cabletalk last month wrote of the entire $11.4 million of remaining goodwill acquired with CANS, leaving it with shareholders' funds of only $2.9 million, those discussions might get a little heated.

In the meantime the company has slashed its cost base and operating earnings are recovering.

Heavily reliant on network maintenance contracts for Telecom, which have supplied 80% of revenue, and for TelstraClear, it is looking to train its 300-plus engineers to win work in the growing Information Communications Technology (ITC) field formed by the convergence of telecommunications and IT .

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

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