Kordia sells Orcon to NZ investors

New Zealand government-owned Kordia has sold off its internet service provider subsidiary Orcon to a group of private investors.

Kordia has sold off New Zealand internet service provider (ISP) Orcon to a group of private investors led by Vivid Networks' managing director Warren Hurst.

The New Zealand government-owned telecommunications company announced on Monday that Orcon, with its close to 60,000 customers, has been sold to a group of New Zealand businesspeople headed by Hurst for an undisclosed sum.

Kordia chairman David Clarke said that while Kordia had been able to increase Orcon's annual turnover by 400 percent since the AU$24 million takeover in 2007, it was time for Orcon to find new owners.

"Structural changes in the marketplace mean there are likely to be better opportunities for Orcon with a different owner," Clarke said in a statement.

"Orcon played an important role in Kordia's transformation from a broadcast to broadband business."

Kordia New Zealand CEO Scott Bartlett said that the sale was aimed at shifting Kordia's focus away from the retail ISP market.

"Kordia is fundamentally a 'B2B' business, so being able to reset our strategy to better focus on delivering exceptional service to our business customers is really where we need to be," he said.

Bartlett will stay on as Kordia NZ CEO, and a new CEO for Orcon will be found, Hurst said.

"At that time, we will discuss our growth strategy going forward. In the meantime, it will be very much business as usual for Orcon customers," Hurst said.

New Zealand Labour communications spokesperson Clare Curran said that the New Zealand government should reveal the cost of the deal.

"The government is duty bound to tell the New Zealand public how much Orcon has been sold for. It was an important investment by Kordia, and the return on that investment should be public knowledge," she said.

"The bottom line is the government should have decided whether Orcon is now a strategic asset, and if it is an important means to drive uptake of ultrafast broadband."

Curran said that having a "nimble, innovative telco" like Orcon would be useful to drive uptake on the Ultra-Fast Broadband (UFB) fibre network at a time when take-up is slow and the cost per premises passed is going up.

"The wheels are coming off the government's ultrafast broadband scheme, few people are signing up, and the cost is starting to blow out," she said.

"This reeks of the government's usual short-term thinking. Selling Orcon off cheaply because they are short of cash isn't good planning. There should have been a wider strategic view of Orcon's role in getting the stumbling UFB rollout sorted."