John Linton Despite the plethora of indications that business conditions continue to deteriorate the key business indicator for Exetel, recurrent monthly billings, continues it's move slowly Northwards. April recurrent billings achieved record results for ADSL1, ADSL2, SHDSL, VoIP, Wire Line, Mobile, SMS and Hosted Services.
The 'records', with the exception of VoIP, were only small gains on March but they, nevertheless, were gains in a period where Telstra continue to target Exetel customers (along with all other ISPs I'm sure) and Exetel continues to take conservative positions on acquiring and retaining customers generally.
Although it far from a major revenue contributor I was particularly pleased to see the very strong growth in VoIP revenue - and not just from the introduction of Naked ADSL2 'bundled services' which have been significant of themselves. More than 60% of the growth in VoIP revenues has come from current Exetel customers deciding to use Exetel's VoIP services having previously either used another VoIP provider or not used VoIP at all.
Since we introduced the 'equipmentless' VoIP service we have noticed that it has achieved the objective of try before you buy we expected it to with people signing up to use the service - realising that it is as good as their current PSTN service and then 'taking the plunge' and buying the required VoIP ATA or router to eliminate using the 'dial back facility'. So I was quietly pleased that initiative worked out almost exactly as we had hoped for.
I had expected the various negative indicators for almost every aspect of the economy to have materialised in to slower service take ups for Exetel but, apart from the greater number of non payment customers I don't see any effect, at this early stage, in terms of slower growth in customers across all of the services that Exetel offers - which has surprised me.
Perhaps the communications industry is 'exempt' from the current financial concerns and the market is still growing relatively strongly and therefore 'protecting' small companies like Exetel as our modest growth may well be lower than the total market growth? It would be a logical explanation though at least two ISPs of similar size in customer numbers to Exetel seem to have indicated to me in the last few weeks that they were experiencing no growth - however I can't place any reliance on the reality of what they were really experiencing.
It's obviously too early in the 'cycle' to reach any real view of what's going to happen and I'm not remotely 'panicked' by what a worst case scenario may bring as Exetel remains in good financial shape with several major operating cost reductions due to come in to effect over the coming few months.
Based on the results as at 31/3/08 I would expect Exetel to reach its planned revenue and profit targets for this financial year (which were set back in June 2007) with relative ease though we won't exceed them by much. Maybe that assessment is premature and some things will turn out for the worse more quickly than currently seems likely but it's difficult for me to see that happening - but then I've been spectacularly wrong before.
We will have to ensure that 'bad debt' doesn't become an issue but that is a pretty simple thing to do albeit time consuming and often unpleasant. Unless there is dramatic change downwards in new and churn applications there is nothing particularly more threatening in the marketplaces than we have seen to date (I mean just how much more can Telstra do to 'attack' Exetel's user base than they have already done? Just how much more can TPG give away in off peak data downloads than they have already done?).
We have already taken the precaution (and therefore the revenue hit) of ceasing to offer the AAPT/iiNet ADSL2 service and it seems highly unlikely that we will re-offer that to new users for the remainder of this financial year as we doubt they will fix their provisioning issues of new services that quickly. TPG's offer of very high off peak downloads continues to be of assistance to us in encouraging the less 'profitable' ADSL1 customers to move away which reduces both average bandwidth usage (more than I would have thought) and also debt collection costs.
We have enough 'treats' left in this year's 'cookie jar' to allow us some room to move in the final quarter should we need to do that.
So, cautiously, the plan for the next three months is to continue to act very conservatively and to ensure we meet each of the last three monthly targets to conclude what looks like being the most successful year of Exetel's short 'life' to date.
Fingers crossed.