The trendy young crew driving Orcon's trademark bright purple muscle cars are now civil servants.
State-owned enterprise Kordia has bought Orcon, the country's fourth largest ISP, for $24.3 million in a deal closing July 2.
When asked whether Kordia would buy another ISP, Kordia CEO Geoff Hunt said, "This is not the end. We see a lot of consolidation in the ISP market, and we intend to grow in this area." Hunt said Kordia would spend some time "bedding down" the Orcon deal before lining up the next one, however.
Orcon has around 75,000 customers, with around one third on broadband plans. The North Shore-based company is 80% owned by founder and CEO Seeby Woodhouse, and 20% buy chief technology officer Mark MacKay. Woodhouse will stay on as a director, but hand day-to-day running of the company to Scott Bartlett, who graduates from GM to CEO.
The two companies will maintain separate boards and separate offices, with Orcon functioning as the retail arm for the state-owned Kordia (Trevor Mallard and Michael Cullen are the shareholding ministers), which has previously operated as a broadband wholesaler.
Asked whether other ISPs who are potential Kordia wholesale customers could be put off by Kordia owning Orcon, Woodhouse said many would find Kordia and Orcon a less intimidating proposition than the other two wholesalers in the market with retail arms (Telecom with Xtra and TelstraClear with paradise.net and clear.net). Kordia is adding WiMax and metro wi-fi elements to its wholesale broadband offerings, and will shortly open a "wi-fi zone" in the Auckland suburb of Parnell. Kordia has also opened tenders for a "small WiMax network somewhere in the North Island".
Hunt said local loop unbundling was a key reason behind Kordia buying Orcon, and that it would not have been in the hunt for an ISP if LLU was not imminent (Orcon's Bartlett expects the Telecommunications Commissioner to announce LLU pricing on or around November 9).
Bartlett says it will be business as usual for Orcon customers, though they will notice an expansion of its home phone line business that has been ramping up over the previous two months. The company remains committed to its deal with Vodafone, kicking in during October, which will see an Orcon-branded version of Vodafone's cellular service, complete with purple Orcon SIM cards.
Under this Mobile Virutal Network Operator (MVNO) arrangement, similar to Virgin's re-sold 'virtual' phone service in the UK, Orcon customers will not get access to Vodafone 'live!' services, but Orcon is lining up alternative content partners. Bartlett points out the company already has some experience in this area through its home page, Orcon.co.nz, which features Digirama content, and is about to reanimate its experiment streaming video from Sky TV and Auckland free-to-air music television channel Alt TV.
Anyhow: $24.3 million dollars! Seeby's main man Scott is well entitled to call it a "genuine Kiwi success story" (North Shore locals who've seen Seeby's Ferrari roar past are already aware). Woodhouse founded the company 10 years ago this September, apparantly with only $100 in his pocket, and maintains it has always been profitable (and the evidence is good: he's never had to take on debt or, more significantly, especially today, bring in another investor). And in case you're wondering, I've had my calculator out, and 80% of $24.3 million is $19.44 million