From Start-Up to SOE

Mon 11 Jun 2007

Everyone likes a success story. And the sale of Auckland-based Orcon to state-owned enterprise Kordia™ Group certainly falls in that category; and is a chronicle not too far removed from that of Trade Me.

What was once a teenager's dream to build a large technology company has manifested into reality, and ultimately, the sale of this successful start-up venture to Kordia™ for $NZ 24.3 million.

Seeby Woodhouse, founder of Orcon, starting harbouring such grand ambitions when-as a 15-yearold high school student in 1994-he participated in the Fletcher Challenge Young Enterprise Programme.

As part of his vision, he created a visual icon called the Orconagon. This symbol was to become a part of the company logo and name that has now become a nationally recognised brand.

While still at university in 1994, Seeby started Orcon Group Limited; a small business on Auckland's North Shore providing computer advice and support, mobile phone models and accessories. Soon, he began delving into PC upgrades and repair services. By 1996, the business had grown substantially and began distributing computer accessories and supplies throughout the Auckland region and other parts of the country.

It wasn't until 1997 that Orcon made its transition into the ISP world with a no-frills product priced at around half the price of its competitors. The next step was for Orcon to start providing Internet capacity to other ISPs. It soon became clear that its focus must remain on Internet services and so Orcon dropped the hardware component of its business.

Two years on and Orcon joined forces with Digital Edge Limited. With Mark Mackay on board, Orcon Group became Orcon Internet Limited. A year later, and the newly formed company began an acquisition programme, purchasing 20 small ISPs over a period of six years; a smart move that secured a large and loyal base of retail subscribers.

By 2003-some six years after it delved into the Internet market-Orcon had grown from a small "3 dial-in modem company" to become New Zealand's fourth largest Internet provider. Today, the company has 95 staff; has grown its revenue fifteen-fold; and become a significant presence in the telecommunications industry.

As Trade Me founder, Sam Morgan, put it: "Orcon has a similar start-up mentality to Trade Me and a reputation for delivering great service and products to their customers that has been recognised by numerous awards."

"This mentality won't be lost with Kordia™'s acquisition of Orcon," insists Seeby. "Orcon will remain an independently run business and very little will change. One key and positive point that we'll be taking from this acquisition is Kordia™'s broad industry knowledge, its capabilities and the opportunities this industry leader will bring to the table.

Officially taking place on 2 July 2007, Kordia™'s acquisition of Orcon is a key step forward for this state-owned enterprise. "As you know, we've been considering a RSP purchase for some time," says Geoff Hunt, CEO of Kordia™ Group Limited.

"We wanted to shift from being a wholesale service provider of broadcast and telecommunications to also delivering a range of direct services direct to consumers. We wanted to be more closely connected to end consumers and this acquisition will allow us to do just that."

"We'll be expanding on our Extend service offering; Orcon's customers will be able to choose from a greater range of products and services; and we'll be encouraging Orcon's continued growth.

"Basically, it'll be business as usual for this Kiwi success story."