John Linton
by merging Exetel with a similar sized company.
Over the past 12 months Exetel's directors have considered various ways of operating the company simply because that is a sensible thing for any growing company to do. Over the years we have had a few, very improbable, approaches from totally 'cr**' companies offering to "buy" Exetel which we haven't given more than a moments consideration to due to the sort of people who run those companies neither having the money nor, on the odd occasion they may have had the money, the basic human decencies that would allow any vaguely ethical person to do any sort of business with them. So we haven't really ever seen (certainly have never sought) an opportunity to sell Exetel for the past five years.
Some months ago I had an approach from a reputable 'middle man' acting on behalf of a communications company that, from what I can tell, is a little bigger than Exetel who wished to explore possible "joint operating possibilities". Having briefly checked with Steve and Annette I advised the company that we didn't think there were any ways we could do business with a competitor even though we didn't, as far as we knew, come across them in the marketplaces we operated in very often. I received a follow up call just before Christmas asking whether we had changed our views on the original 'parameters' to which I responded in the negative. So I was surprised to receive a call yesterday from one of the owners of the business (I really must check how my mobile number comes into the possession of so many people I have never met) who apologised for calling with no introduction but as he found himself in Sydney unexpectedly this weekend wondered whether we could meet. I explained that, unfortunately, that wasn't possible but we could discuss anything equally sensibly over the telephone.
We had, I think, a useful chat for close to an hour covering our mutual interests in the communications business and general economic outlook for the coming months and how we, differently, viewed the current and near future situations in wireless broadband and business mid range Ethernet and fibre services. He knew a lot more about my views than I did about his because he apparently reads this blog on occasions so he got to do a lot more talking that I did. The purpose of his call (after we quickly established that his company didn't have anything like the financial access to buy Exetel and we certainly didn't have the money to buy his company) was to explore the 'merger' of the two companies plus a third, smaller, communications company via an IPO that his company had been working on for some time and had reached the stage where the underwriter had advised them that the 'float' would be much more successful if the 'entity' was much bigger.
It's an interesting idea and the general concept has some initial appeal but, at least for me, the practicalities are insurmountable because both the business philosophies of Exetel's owners and the operational methods of Exetel generally are so far away from those of the company approaching us (and the overwhelming majority of other sensible commercial entities in Australia) that there is virtually no point of contact. We discussed this for a few minutes and quickly came to an agreement that while a superficial fit was clearly possible it would never work in practice. Essentially, their shareholders are sensible commercial investors who want to pay themselves, sensibly, as much money as possible by making as much money as possible. Exetel's shareholders are content to pay themselves very little and sell services at the lowest prices possible. Not really a meeting of the minds.
We concluded our conversation amiably and I agreed to discuss the bare bones concept with Steve and Annette and I did reiterate that in theory the concept had a great deal of appeal but doubted that the 'logistical' problems could ever be sensibly overcome. I then went back to contemplating changes to the Exetel 2010 business plan - particularly it's ambitious growth targets and the rapidly growing operational costs and salary costs that are required to achieve that sort of growth. I am not ashamed to say (as opposed to "I make no apology") that the steep increases in costs to grow Exetel to double its current size do concern me and they concern me quite considerably. A 'merger' would be a whole lot better way to get to double the size - and it only requires some documentation and signatures - so the phone call completely destroyed my ability to concentrate on mundane rows and columns of figures. That is if you ignore all the issues that come after the signatures and champagne.
Perhaps the real reason is that I, personally, could never contemplate working for someone else ever again.