Striking a pleasing new chord

ROB O'NEILL
Last updated 05:00 26/08/2012
Kordia chief Geoff Hunt
JOHN SELKIRK/Fairfax NZ
Kordia chief Geoff Hunt.

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There's an air of anticipation at networking company Kordia's headquarters in Auckland after two years of writedowns took their toll on the company's results.

With its new numbers, for the year ended June 30, due to be released next week, state-owned Kordia may not only have put the worst behind it, but it could finally be able to show some tangible results from a long-term strategy to transform the business.

Ahead of those results, Kordia has announced significant contract wins, confirming deals to provide voice services to engineering consultancy Beca's 11 sites across Australasia, as well as inking a contract to deliver voice and wide area network (WAN) services to Burger King's New Zealand retail network, including its head office and distribution centre.

Kordia also boasts a slew of other recent signings with companies such as McConnell Dowell, Bell Tea, Dominion Breweries, Tegel, the Child Cancer Foundation, Cambridge Clothing, Stevenson, Miraka, and Konica Minolta.

In Australia, it has landed a $107 million communications services contract with coal-seam gas explorer Australia Pacific LNG, a project that stretched across a 100,000 square km area with extensive communications needs.

Kordia chief executive Geoff Hunt said almost all divisions of the company are now growing strongly, and one of Kordia's biggest monkeys, the writedown of the value of its analogue broadcasting network, jumped off the company's back in last year's numbers.

Kordia could see what was coming in 2006 - and it wasn't pretty.

Almost all of the company's profit-making businesses had a timestamp on them and new revenue lines were required.

"The strategy was to survive the analogue switch-off," Hunt said.

That switch-off will see 200 out of 400 of Kordia's antennae sites being decommissioned over the next year or so, typically sites that only serve television.

That led to a transformation plan Hunt describes as "from broadcast to broadband" which included a high-profile acquisition when it bought internet service provider Orcon in 2010. New products were rolled out, including OnKor, a network for business users with voice, data, video and more.

Kordia is still very much in the broadcasting game, though, operating the digital TV platform Freeview, building Igloo, Sky TV and TVNZ's new joint venture platform, leasing satellite capacity, supporting outdoor broadcasting and operating an open-access content distribution network for digital media providers.

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Almost all of that is new business as well.

And then there are maritime networks to operate, emergency services to support and technology to manage to monitor New Zealand's maritime zone.

Hunt said cloud services (computing services delivered across the web) are also beckoning, though Kordia will be looking for services that specifically fit with its own business profile.

Some of the biggest trends in communications are now playing strongly to Kordia's strengths rather than against them, not least of which is the shift to mobile.

Kordia Solutions in Australia is working for all of the major mobile network operators (Telstra, Optus and Vodafone Hutchison Australia) either directly or as a subcontractor.

Those networks are now going through rapid change as they are extended both geographically and in bandwidth, something Hunt can't see diminishing over the next few years.

The equivalent division in New Zealand is still "reinventing itself", Hunt said, but boasts a highly skilled technical workforce.

Other changes are at play as well, with state-sponsored broadband rollouts on both sides of the ditch.

Hunt said that is also to Kordia's benefit as it will take costs out of the business - and will offer new opportunities for Orcon.

Hunt said Orcon has already put 200 or so customers onto UFB, has a good pipeline of interested customers and is looking at automating provisioning for the new network.

NO PIPE, NO DAB

Not everything has gone Kordia's way in it journey to reinvent its business. A high-profile and prolonged effort to build a new trans-Tasman fibre optic link failed, but Kordia chief executive Geoff Hunt insists it still has to happen.

"There has to be another trans-Tasman cable for resiliency," he said, because only one link goes direct to the United States. It is also a lot cheaper to go across the Tasman and link from there to the rest of the world than to take on the vast Pacific, he said. "We always thought there was the lower cost way."

Despite the failure, Hunt said the threat of competition alone put downward pressure on international bandwidth costs.

"Somebody will build another cable," he said. "it's about when, not if." Hunt was sanguine about the prospects for digital radio in New Zealand after the Ministry of Business, Innovation and Employment's (MBIE) radio spectrum group released a draft consultation last week that said commercial digital radio services are unlikely in the next five years. MBIE said there has been little demand for so-called DAB radio from either industry or consumers.

"It remains unclear whether commercial digital radio services will be introduced in New Zealand in the outlook period [five years]," the report said. "Kordia's test broadcasts remain the only implementation of this technology in New Zealand, and receivers are not widely available. Until the technology becomes more widely available in New Zealand, particularly in new cars, the Ministry does not foresee significant demand for digital radio."

Hunt said DAB was now "way down" Kordia's priority list.

- © Fairfax NZ News

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