John Linton
Although figures concerning performance over short periods of time aren't particularly meaningful they do illustrate some aspects of where markets are at and what competitive pressures exist in some ways. A long term customer sent me a screen shot of Exetel's April 2004 ADSL1 pricing yesterday which starkly showed how prices had changed over the past almost 6 years. The only plan that would have begun to approach the needs of the most of today's family users was the 1500/C plan which gave you 18 gbytes (with $A4.00 per gb excess) for $A95.00 per month at 1500/256 speeds. Before laughing out loud you need to remember that plan was the best on the market, by a very long way, in terms of both included downloads, monthly access price and affordable excess charges.....and at a zero transfer cost.
Back in late 2008 when we decided to grow our corporate business to become larger than our residential business we did so in the expectation that our ADSL broadband business would reach a high point in 2009 and then decline at an unknown rate as wireless ate in to it at the bottom end and there was no more growth at the top end due to saturation and the price wars between Telstra and their bigger competitors. The stagnation/saturation certainly seems to have occurred over 2009 according to the ABS figures and the various company reports over that year. Wireless certainly grew dramatically though the full year's figures are not yet available. Exetel's ADSL growth certainly slowed over the first 9 months of 2009 but the growth since then has been very high with 70% being achieved for the first 16 days of January 2010.
Checking on the year end 2009 targets and fiddling with the revised planning figures for 2010 I noticed the stark contrast between our business sales in the first half of this month compared to January 2009 and realised that those sales were running at 600% more than January last year. One of our key decisions for the 2009 calendar year plan was to build a direct corporate sales force based on some fairly unusual characteristics and premises which we commenced in late February when we hired the first of the graduate trainees we were going to base the personnel for this program on. Since then, and counting the latest trainee who joined us last week we have 11 corporate sales people who, on average, have been with Exetel for less than 5 months. So if you do some elementary maths and aren't too fussed about statistical theory this 600% growth has been achieved at a direct ratio of 'add a person' and within five months they become 100% productive compared to what the accumulated experience and 'productivity' of the one person in corporate sales achieved up in the five years up to January 2009.
Ignoring the Gonzo maths, the issue is whether this pretty linear growth can be maintained, and preferably increased, over the coming year or is there some sort of 'saturation point' along the way and, if there is, where will that occur. The other issue is that Exetel's corporate sales are very small at the moment peaking at 70 or so in November (before the 'Christmas slowdown' made it difficult to set new records) but eventually the companies from whom our young sales force is taking customers will eventually notice and our free run of selling Ethernet services at less than half their bloated prices will be slowed as they try and counter act what will eventually become noticeable losses.
My view is that our ambitious targets are so small, relative to the market, that Exetel will remain un-noticed in any real sense for the next twelve months, at least, which will give us time to complete the first phase of this project (the basic training of a 48 person corporate sales force) which will fully 'equip' them to deal with subsequent 'competitor strategies'. The target is to get to around 400 corporate sales per month based on an estimate that there are around 400,000 customers for Ethernet products between 4 and 1,000 mbps excluding the 1,000 largest corporate/government customers of data services. The simple math is that if you can select, train and keep a sales force of ten that sells 100 new connections per month it can't be that much harder than do the same for 30 more and reach the monthly sales target of 400 a month if the target market place is 400,000 and it's only marginally more difficult if the target market place is only 200,000.
So, is 2010 going to be the year of the corporate Ethernet sale for Exetel? Will corporate sales deliver close to the residential ADSL revenue by the end of the year? Can Exetel grow a solid corporate business that exists now in to something much more formidable over the coming year while other companies put more and more effort in to 'rescuing' their residential ADSL market shares?
One more thing to worry about.