TeamTalk has big plans to put its latest $8.7 million capital raise to work, starting with an upgrade of CityLink's Wellington fibre optic network.

TeamTalk, a publicly-listed telecommunications provider, gained strong shareholder support and sold 8.4 million new shares under an underwritten 1 for 3 pro-rata renounceable rights offer.

Shareholders snapped up 81% of the new shares, with the remaining 1.9 million new shares allotted to the underwriter or sub-underwriters.

In combination of an earlier equity raise of $2 million to institutional investors and high net-worth individuals, TeamTalk now has $8.7 million in capital to fund and grow.

The company will concentrate on expanding its fibre and mobile radio businesses for CityLink and TeamTalk respectively.

TeamTalk says it plans to modernise and upgrade CityLink's Wellington fibre optic network, including transitioning a portion of the current network within the Wellington CBD from aerial to underground and increasing the network's speed and capacity.

TeamTalk will also roll out its new digital radio network, which is due to be finished by June 2019. It will enable a wider range of services to be provided and grow TeamTalk's addressable market by targeting customers in the conventional radio network.

According to TeamTalk chief executive Andrew Miller, shareholder support validates the company's strategy going forward.

“[It] is very much appreciated. The new capital enables the company to fund its new digital network ensuring continuity in delivering mission-critical communications and creating additional value for both existing and new customers. The new network will also enable integration with other communications networks as well as offering new services and solutions,” Miller says.

“This will not only underpin our existing radio business but enable TeamTalk to grow its revenues and improve our margins by reaching into the conventional radio market, an area that TeamTalk has traditionally not competed in.

He adds that more organisations are diversifying their communications portfolios, particularly due to Health and Safety legislation changes, as well as review findings from the Kaikoura and Christchurch earthquakes. Miller believes mobile radio is a critical part of service.

“The other area of investment to be completed by June 2020 is around our Wired Networks which provide broadband connectivity and ancillary related services to a range of wholesale customers and end users in the Wellington and Auckland CBDs,” he says.

“The investments TeamTalk are making are substantial and will both improve our existing infrastructure and enable us to offer new services and products to our customers. This will result in sustainable profitable growth and better returns for our shareholders.