Kordia looks to sell Orcon

Kordia looks to sell Orcon

Kordia has confirmed it's been in discussions with "several parties" to offload its consumer broadband arm Orcon.

A spokesperson for Orcon is keeping mum on what companies the telco has been talking to, but says interest in the business intensified following its operational merger with Kordia late last year.

Kordia says it will make a formal announcement in the coming weeks.

Telecommunications Users Association NZ (TUANZ) chief executive Paul Brislen says today's developments have been rumoured for months. The current telco environment for small tier two players such as Orcon has been difficult, he adds. Topping it off is the recent Commerce Commission decision on copper pricing, which saw only a very minimal drop in costs to ISPs.

"The tier two players I've spoken to have said there's no money to be had at this level... There was an expectation that when Chorus unbundled and work on UFB began, their margins would improve on copper services. That's been more or less derailed by the government's announcement," says Brislen.

"Unless you're up at the top end with Telecom, VodaClear [sic], and Call Plus [which owns Slingshot], it becomes very difficult."

Brislen says it's too early to speculate about which companies might be in the mix to buy Orcon, but it would be a smart move for 2degrees to buy a fixed-line provider. 

"[Eric Hertz, 2degrees CEO] talked about partnering with somebody last year for fixed line following the Vodafone / TelstraClear  acquisition announcement...They've got a lot on their plate and need to deploy th 1800 MHz LTE, but I would like to see them branch out into fixed line in order to provide some competition," he says.

Overseas there are organisations completely outside of the sector making strides into the telco market. Brislen points out groceries giant Tesco in the UK, which runs a mobile virtual network on O2. He says The Warehouse might be in a similar position to repeat this in New Zealand.