Queensland ISPs suffer spate of bankruptcies

Queensland ISPs suffer spate of bankruptcies

A spate of failures is hitting Queensland companies in the Internet connectivity and services market.

Cyberlink Technologies, a regional Internet Service Provider (ISP), has gone into voluntary administration, owing about $200,000, with Telstra as a major creditor. It appears headed for liquidation, according to a spokesperson for administrator Clout and Associates.

A Brisbane ISP that owes similar amounts is in the process of being put under administration. The spokesperson declined to name the company but said a preliminary evaluation suggested bankruptcy will have to be declared.

Australian creditors of yet another failed Queensland Internet-related company, Oxford Media, stand no chance of recovering the $700,000 owed to them, according to Clout and Associates.

Oxford went into liquidation early this year, but "the money trail goes all over the world and there is little prospect of finding any of it", the spokesperson said.

The news is better for Pronet, a Brisbane ISP that has won backing from creditors led by Optus Communications to trade its way out of administration.

Financial straits

A new management team, headed by general manager Peter Schlyder, has pledged Pronet will repay creditors 100 cents on the dollar within 18 months.

Schylder suggested the sudden rash of Queensland ISPs in money trouble stems from the underlying structure of the industry.

ISPs are often launched on a shoestring by people with strong technical skills.

But as they grow larger and increase capacity, significant investment is required. At the same time, day-to-day management of a business with explosive cash flow calls for different skill sets than the founders often possess.

The combination can suck ISPs into severe financial straits of the type now surfacing in Queensland, Schlyder said.

While financial troubles are pruning the ranks of Queensland ISPs, consolidation is also occurring. The most significant recent example is OzEmail's $2 million majority acquisition of PowerUp, Brisbane's largest ISP and operator of WebCentral, Australia's largest Web-hosting business.

The transaction will be finalised shortly with OzEmail taking first option over shares retained by the principals of PowerUp and WebCentral.

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