John Linton ....with all three monthly targets achieved and the aggregation of the three months exceeding any previous quarter in Exetel's brief history in terms of revenue........which is much better than not achieving the planned targets....but profit is a sad and sorry picture.
As we knew that these would be very tough times, and we have known they were going to be as far back as two years ago, it is heartening that we have kept the company growing and have met the first three overall monthly revenue targets of the new financial year. We failed miserably to meet the profit targets which we have addressed by increasing the number of plans that incur an account management fee and getting reduced costs of some services from one of our major suppliers - those two actions will redress the profit shortfalls assuming that we continue to generate net new customers at the current rates over the coming months.
I talked with two acquaintances in other ISPs who I have known for some time yesterday and they were not very happy with the current state of the markets in which they operate. Naturally they didn't disclose any 'hard' financial details but they both were anxious to know what the result was of Exetel raising its prices in both new sales and customer retention (their words not mine). I said it had no discernible effect on new applications and it was too early to tell what the actual churn number to be. Both of them expressed very negative views on the first quarter and both expressed even gloomier views of the coming quarter. They were depressing conversations. However one of them 'solved' my problem with 'bundling' Optus mobile plans with ADSL services by pointing out a different way of looking at the 'numbers'. Sometimes it's good to have chats with 'friendly competitors'.
We have been trying to work out how to use Optus new 'capped' mobile plans as incentives to bundle with ADSL plans to combat the current Telstra bundled offers and what we see as happening from other ISPs in the near future. Being the very conservative person that I am it didn't/doesn't appeal to me to take the risks I thought companies like TPG were taking in reselling the Optus mobile services and we don't have the 'need' to add profitless revenue in the ways TPG appear to be doing it....we certainly don't have the money to promote it. I had just about given up on this approach until the chance comment made in a conversation yesterday showed me how it could be done and doubtless how TPG was making such attractive offers at, effectively, zero risk.
Depending on the results of meetings with Optus today between Optus 'marketing experts' and our 'numbers researcher' we could solve the problems of bundling a zero month contract mobile plan at $5 - $10 less than the Optus retail price plus offer a $10.00 to $20.00 discount on the ADSL plan (depending on the mobile plan purchased). If a customer had transferred 3 mobiles they would get all our most popular ADSL plans for 'free' each month. Well worth the time of the two conversations.Perhaps it, yet again, illustrates that I am completely the wrong person to run a residential communications service provider.
One of the conversations also touched on the point of a buy out as the person concerned had been having a pretty awful time for over twelve months and didn't like what he saw in the immediate future at all. We don't have the money to be a likely buyer even on any sort of deferred payment terms but I gave him the names of two people who might be able to assist him. We briefly discussed using our Sri Lankan company to provide sales, provisioning, billing and support services and/or using other aspects of Exetel's 'buying power' but we quickly reached the conclusion that such arrangements were impractical though financially attractive. I was a little surprised at the problems he was having as his service pricing was between 5% and 8% higher than ours (if we could make those extra margins we would be 'rolling in money').
A sobering reminder of just how hard it is at the moment in this industry.
Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46