John Linton
I have, briefly and not very seriously, looked in to what would be rquired to turn Exxetel in to a publicly listed company and therefore have spoken to what I consider to be sensibly knowledgable people from time to time. As well as my own generated enquiries I get random emails and telephone calls from people I don't know wanting to discuss some form of 'merger' that would provide some sort of size and 'symbiosis' that would allow the joined private companies to become a listed entity.
I had one such call yesterday and, as always, I listen attentively and am unfailingly polite always expressing how flattered I am that Exetel is considered to be important and valuable enough to attract such attentions. It never seems to occur to the sorts of people that call that the person they are calling has an IQ above that of a rotting carrot though somehow was intelligent (lucky?) enough to actually create a company that had enough benefits attached to it to promote their interest.
The other issue that seems to escape such people is that they must seriously have delusions if they believe that someone who has chosen to create a commercial business in exactly the way they want it to operate and has then poured their life and soul into running it in exactly the way they want to run a company is going to cheerfully hand it over to be someone else while staying around as a 'valued consultant'.
What sort of ego and blind stupidity must such people possess?
These calls, when the caller is pushed to "net out what you are proposing" generally end quite quickly though there are usually, as with yesterday's call, plaintive entreaties to "get together and kick some ideas around". (generally these people have as much command of the English language as a failed 16 year rap singer aspirant). (God, how I detest being called "mate" by people I don't know
Anyway.....as it's Saturday morning and I have more time than on most days I had a quick look at the closing price pages of this morning's financial press to see how telecommunications companies stand at the end of the longest and strongest bull market in Australia's history - not a very encouraging sight.
From what I saw every telecommunication cmpany, from the very largest to the one celled organisms in the 'penny dreadful' section, have not benefitted from 11 years of ASX year on year rises and currently stand at:
Company__ Year High___Now
Telstra___$4.97__$4.91
Optus___$3.22__$2.94
AAPT___$4.55__$3.59
iiNet___$2.99__$2.36
Pipe___$5.02__$4.00
PeopleTel___$0.09__$0.04
Chariot___$0.16__$0.06
EFTEL___$0.15__$0.08
All it seems to show is that everyone who invested in telecommunications companies with a view to holding the stock (as opposed to day trading to make tiny 'movement profits') has lost money and, with the predictions moving forward, will continue to see the value of these investments continue to fall (with the exception of the Telstra installment receipts which were a goodbye present from the previous government).
If you look at the three tiny companies at the bottom of the list (how did they get listed in the first place?) you can see that they are practically worthless with all reporting constant losses and none of them with any understandable future strategy.
Whenever I've looked into 'floating' a small company the advice has always been the same - "you're too small at the moment and you need to be able to put forward a very convincing story on how you have something unique, that can't be easily copied and will provide massive revenue growth and well above average dividends".
Fair enough - pretty much what I would look for if I were to invest my own money.
Unfortunately I have never been able to see how Exetel could begin to meet any of those conditions:
--Massive growth - we have a 4 year record of very solid growth but we have no plans or capabilities to move beyond that.
--Unique Offerings - we are unbelievably efficient but nothing we do is unique
-- Above Average Dividends - we have paid two tiny dividends (actually a tax effective bonus to directors who have had no pay increases for three years) in 4 years and no plans/ability to change that objective based on our 'go to market' "lowest cost service in every category".
I can't see how Exetel could ever become a public company and, truth to tell, I also fail to understand why anyone ever shows an interest in 'buying Exetel'. What on Earth would they get for their money (assuming that they eventually realise we aren't going to give them the company for nothing).