05 May 2014
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2degrees likely buyer for Orcon?

By Heather Wright

Speculation is rife that Orcon is about to pass into new ownership, with 2degrees rumoured to be buying a majority stake in the company, if not outright ownership.

Techday has been approached by multiple sources, claiming 2degrees is purchasing either 51% or 100% of Orcon, which engaged investment advisors Grant Samuel earlier this year to manage potential deals.

2Degrees was one of companies originally touted as a likely buyer back in March when news of Orcon looking for investment first hit the headlines.

The company has a strong foothold in the mobile telecommunications market, but lacks the ISP offerings of broadband and landline phone services that would enable it to compete more effectively against key competitors Telecom and Vodafone, both of whom have complete communications offerings.

Orcon, meanwhile is primarily known for its broadband and landline component. The company has been quick to push ultrafast broadband services and is gaining a solid foothold in that arena.

The company entered the mobile market in 2010 with four mobile plans, four handsets and the 020 Orcon numbering, and piggy-backing on Vodafone's network. Then chief executive Scott Bartlett called the move 'a natural progression' for the company. While the company's website now refers to it offering 'fixed-line and mobile services', there's now little mention of mobile phone offerings.

Last year the company launched GeniusGo, a smartphone app which 'essentially turns your mobile into a cordless landline'.

Meanwhile in a September 2013 submission on proposed Telecommunications Act changes, Orcon lamented that Telecom and Vodafone were able to offer fixed and mobile bundle deals and questioned potential cross subsidising between mobile and fixed-line.

Other options

Other companies initially touted as potential buyers for Orcon included The Warehouse Group and CallPlus, with Voyager and Snap Internet also suggested as possible interested parties.

However, in March, The Warehouse publicly declared, via a notice to the NZX, that it had ‘no interest whatsoever’ in making a bid for Orcon.

In February, Orcon chief executive Greg McAlister told Techday the company had ‘gone through really significant growth and that means we do need some more investment to ride that wonderful growth wave’. At the time he said the company was ‘looking at options’ and couldn’t specify what from the capital raising will take.

Kordia sold Orcon in April 2013 for 'about $38 million' according to Treasury valuation report on Kordia. The new ownership comprises 48% Semple Investments, owned by Vivid Networks managing director Warren Hurst and Orcon COO Tony Reimann; and 52% ACL Nominees, a consortium of anonymous business people.

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