I'm not sure whether the timing is right, but then I doubt that anyone can ever be sure about timings, but we have pretty much decided that the time has come to recognise that we can't continue to just buy wholesale services from major carriers and 'add value' to those base infrastructures beyond the near future.
The costs of building any sort of real communications infrastructure are terrifyingly large but I have been encouraged by recent enquiries into equity funding, leasing and a visit from our bank yesterday to be reasonably confident that the financial resources needed for a modest start would be available and affordable. To date, Exetel has been funded by Exetel's owners and, including a sizable bank guarantee to Telstra, those investments are approaching $A2 million which is more than we had planned for and we would be reluctant to go beyond the current levels so, if it turns out to be necessary, it's possible that we could obtain up to another $A3 - 5 million of capital if we needed to.
Our current view is that we will base any 'Exetel' infrastructure on wireless services to business users in specific areas where we can see a likely acceptance and a, relatively, 'safe' investment return. The geographic areas we have in mind for the 'pilots' are:
and we would only provide business services (data, internet and VoIP).
The reasons for selecting Orange and Bathurst are the lack of competition (only Telstra and Soul offer business solutions there) and our long term and fairly detailed knowledge of business and government users in those two cities and we can obtain relatively cost effective backhaul. We selected North Sydney because from the roof of our building we have line of sight to a very high percentage of buildings in North Sydney, Milsons Point and the North side of the CBD and we have direct fibre connectivity from our offices to our Sydney PoP. The capital costs of providing wireless coverage in these three areas are, relatively, modest while the number of potential users is quite substantial.
So we applied for a wireless carrier license yesterday (and I seem to remember I said only recently that Exetel had no plans to obtain a carrier license (dynamic business this communications) and we will select the base station and end user equipment from the short listed providers by the end of October with the aim of having the service available in February 2008. We already have a substantial number of business users in the North Sydney and the Northern Sydney CBD area which provides us with an immediate 'market' for the services and, at the prices we believe our own infrastructure would allow us to offer we would expect the intake of new business, which is currently quite reasonable, to significantly increase.
In the two regional cities we would work with one of our current agents in each city to market the services and, depending on the circumstances, could enter in to some formal joint ownership arrangement if that was seen as being beneficial - but our plans are not based on that and we will go ahead in those two cities ourselves if there is no mutual benefit in a joint venture.
The reasons for taking this approach are pretty simple:
1) The pilot expenditure is available from our current retained earnings
2) The cost of adding base stations can be funded from either leasing or external capital injection if necessary
3) The chosen approach has a narrow focus in sensibly lucrative markets that have little competition
4) We have a ready source of 'prospective users' in Sydney, and later in Melbourne and Brisbane
5) We have an excellent 'converged product' business offering
6) It is the first piece of the 'jigsaw' in developing a viable Exetel owned comms network that 'fits' the next two steps
There are, of course, a huge number of dependencies and decisions before we could get this project to a sensible pay off point but, in my view, Exetel can't continue to, solely, provide services based on other companies backbones beyond the next 12 - 18 months.
« previous page
(Page 1 of 1, totaling 1 entries)
next page » Frontpage