ew
Zealanders have a reputation for innovation, a trait that was born in
the pioneering days of the early settlers. They could fix anything with
a bit of size eight fence wire, it was said, and this phrase is still
used.
It therefore comes as little surprise that a power transmission and
distribution company has found a way of using its assets to build a
fibre-optic cable network. UnitedNetworks
is the country’s largest electricity-transmission company and largest
gas distributor, serving some 600,000 customers.
The firm operates ultra high-speed fibre-optic networks in the central
business districts of Auckland and Wellington. The broadband networks
are capable of delivering up to one gigabit per second, giving users
an enormous choice in the way they operate.
UnitedNetworks, the 11th-largest company in New Zealand by market capitalisation,
created the network – unveiled in February 2001 – at a fraction
of the normal construction cost by simply threading the fibre-optic
cable through the existing gas mains.
|
Warnock
‘We
benefited from the synergies between the companies we bought’
|
|
|
UnitedNetworks
now has 50km of fibre-optic cable in the two North Island cities. Chief
executive Don Warnock says
the move into telecoms and the acquisition of a gas distributor have
transformed the firm.
He says: “It has moved our company along from the old, stodgy power-board
mentality it used to have into a competitive, fast-thinking and innovative
company. We are probably the first multi-utility in New Zealand.”
When the electricity industry was shaken up in 1998, power companies
were required to concentrate on either transmission or retailing and
sell the other activity. UnitedNetworks decided to concentrate on transmission,
sold
its retail business and began buying power-transmission utilities.
Two years later, UnitedNetworks entered the gas business, buying the
natural gas-distribution assets of Orion in Auckland, Hawkes Bay, Manawatu,
Horowhenua and Wellington.
“When we bought these businesses, especially the electricity and
gas ones, there were plenty of opportunities
for us to benefit from the synergies between them, so immediately we
were generating tens of million of dollars,” says Mr Warnock.
Until
last year, UnitedNetworks was majority-owned by US power company Utilicorp,
but the latter sold 70 per cent of the shareholding to another company,
Acquilla. “That increased our liquidity 500-fold,” says Mr
Warnock.
“I suppose that, coming from the US, I am very capitalistic and
what I generally believe to be the case is to let the free markets roll.
And I still believe that here in New Zealand,” he says.
UnitedNetworks has achieved strong earnings growth since it was formed
in 1994. Earnings-per-share have risen from 19.9 cents to 77.1 cents.
The company should be able to achieve earnings growth of 10 per cent
a year, according to company chairman Keith Stamm.
Mr Warnock says UnitedNetwork’s electricity prices have not been
raised for more than three years now. “In real terms, our prices
have gone down by nine per cent,” he adds.