According to ComputerWorld NZ, Te Huarahi Tika Trust has revealed its commercial arm, Hautaki Trust, has borrowed NZD2.6 million (USD2.07 million) from 2degrees’s majority shareholder Trilogy International Partners to maintain its minor stake in New Zealand’s third largest mobile operator. The information was included in the Trust’s annual report, released last week. Previously, during the twelve months ended 31 December 2010, Seattle-based Trilogy, which has a handful of investments in telecoms companies around the world, increased its own majority control to 58%; in February 2010 Trilogy gained Overseas Investment Office approval to take 100% control of 2degrees should the circumstances arise.
Interest on the loan, which is repayable in five years, is set at 10.5%. Further, the loan is secured by ‘the shares acquired from borrowed funds plus an equal number of existing shares’. The Trust’s accounts reportedly show that the book value of the Trust’s shareholding in 2degrees rose from NZD8.87 million in 2010 to NZD11.47 million, but 2degrees director and Hautaki Trust board member Bill Osborne said the value of shares was shown at cost in the accounts, admitting: ‘They are already worth a lot more than the first lot that we paid for … At the moment the asset is just sitting in the share register, you only know the value of it when you sell it’. When questioned how the new shares will eventually be paid for, Osborne commented: ‘It’s an issue that the trust has on the table. The plan is to get more Maori involved in shareholding. One of the objectives from the get go was to get Maori more involved in the telecommunications industry and one of the ways of doing that is to get them owning shares’. Since 31 March 2011 the Hautaki Trust has subscribed to a further 4,185,752 shares in 2degrees, bringing its holding in its own right to 4.72%. However, the trust also provides ‘custodial services’ in respect of a further 19,498,240 shares on behalf of other Maori groups, bringing the total Maori shareholding in 2degrees to 10.5%.
According to TeleGeography’s GlobalComms Database, in early 2001 Hautaki (part of the Maori Spectrum Trust) was awarded both GSM and 3G frequencies. It went on to form a partnership with South Africa-based mobile group Econet Wireless International under the name Econet Wireless New Zealand (EWNZ). Plans for a quick launch failed to materialise however, with the cellco claiming it was being restricted by New Zealand’s unhelpful regulatory environment. Several name changes later, GSM services were finally inaugurated in August 2009.