Monday, September 17. 2007Continuing Decline In Number Of "Independent" ISPsJohn Linton I took last Friday off to spend some personal time in Tasmania (a very beautiful place). I spent no time on Exetel issues other than to think about a few things every now and again but I did take a look at the hotel room telephone directory to see what the status of ISPs in Hobart and Launceston was. As the hotel room had a 2006 and 2007 directory two things became clear on my cursory examination â there were not very many âindependentâ ISPs in Tasmania and there were fewer listings in 2007 than there were in 2006; by almost 50%. The only really âhardâ statistics on this sort of thing are provided by the Australian Bureau of Statistics and they appear to have changed their reporting structure this year so Iâm not sure when their 2007 report is due. Their last report, at least the last report that Iâve seen, stated the following âthere were 467 Internet service providers operating in Australia at the end of September 2006, 32% fewer than in March 2005â. I donât save these reports and can seldom bother to delve in to the ABS site to find previous reports but I think the decline to 467 followed a similar percentage decline in the previous year. Of course most of the ISPs that cease reporting are either tiny or very tiny â often only having a few hundred customers. Even the ones that go broke and get some sort of press coverage are seldom very big in any terms other than the amount they previously âhypedâ themselves (examples over the past year have already mostly faded from my aging mind but names such as aaNet, WildIT, Veridas, Koala come to mind). I have commented before on the results of the âwarâ between Telstra and Optus in seeing who can provide every communications service at the lowest price and which of them can give away the most hardware, activation charges and free months of usage. The ability for a new company to enter the ISP (or general communications market) is practically zero as there is absolutely nothing they can offer that either Telstra or Optus (or both) arenât already giving away for free or havenât already locked the service into other services on long contracts. As that has been escalating for over 18 months now, it seems likely that the next ABS report will report a further reduction in ISP numbers and quite possibly a steeper decline than in the previous report. Not really a problem in itself but definitely a concern if the current levels of âgive awaysâ by those two companies continues to escalate. This seems more than a possibility according to a recent article in BRW (September 12th 2007 â pages 34 â 36). If Telstra and Optus do escalate their âwarâ to any great extent over the next twelve months then it is hard to see just how independent communications companies can make any money. Iâve been very happy about Exetelâs financial results each month of 2007 and was looking forward to a progressively easier time on the financial front this financial year. However, now, Iâm not so sure. Of course, a major factor will be how both Optus and Telstra see the value of their wholesale customers in their âwarâ with each other. Itâs pretty clear that Telstra see wholesale customers as competitors, which in the case of Optus, AAPT, iPrimus etc, they clearly are. Optus wouldnât have the same view (at least I donât think they do) but their wholly owned subsidiary ventures seem to be preferred to âindependentâ wholesale âalliesâ. It seems to me that Exetel will need to reduce its operating costs by over 10% to stay where we are today and by considerably more than that to actually progress and make a realistic profit. Such a reduction is a big ask but it can be done, with some difficulty and pain, by Exetel, but I very much doubt that too many other small companies can do what appears to be required in the timeframe available. It looks like being another very busy week. Trackbacks
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Wow, what a great read - you are clearly a highly intelligent individual with a strong business mind and have the contacts necessary to run such a business.
Your writings were very insightful and uplifting to myself as both an Exetel customer and small business owner. Good luck for the future, you're doing a great job so far. Comment (1)
Hi i agree optus are the worst ones if they cant get things thier own way they will ncreased regulation.On any isp inclusing those who uses optus network, optus is only interested in the money to rob customers dry.
Comment (1)
Why do you put aaNet in your category of ISPs that went bankrupt in the past year?
"(examples over the past year have already mostly faded from my aging mind but names such as aaNet, WildIT, Veridas, Koala come to mind)." aaNet seem to be a thriving and profitable business. Comments (5)
aaNet went broke in July 2006 owing more than $2 million to creditors - principally to Telstra Wholesale.
The user base and trading name "aaNet" were bought by a small WA company called EFTel who continues to use the aaNet trading name within its operations. Why did aaNet go broke? Apart from being appallingly managed it sold services for below cost and the owner of the company had no money to invest in the failing company and therefore aaNet couldn't pay its bills. How do I reach this view? By reading the published EFTel balance sheet and P and L that showed a change from profit to loss after EFTel purchased the aaNet customer base. I also, obviously, know/knew the costs of buying the services needed to provide ADSL1 and therefore what the sale price of plans would be. Comments (6)
John Lane who is a director of EFTel posts on Whirlpool that your statements are BS and aaNet is highly profitable.
As he is a director of a public company it seems your comments about aaNet are lies. Comments (5)
1) As far as the public records inform me - John Lane is not a director of EFTel Ltd.
2) EFTel Limited reports a loss for its current reporting period. 3) If you would like to actually provide a factual view, supported by on the public record information to the contrary, then all I can see is that, according to the published public records, Eftel (which operates the trading name "aaNet") makes a loss on its operations which substantiates the view that aaNet always made a loss and continues to make a loss under the complete control of EFTel. 4) aaNet was a similarly run company to WILDIT, Veridas and Koala in that it lost money every month it existed because it was run by incompetent people with no idea of what they were doing - other than feeding their own egos. 5)Nothing has changed until you see EFTel report a real profit. 6) Check the share price movement of EFTel for an illiquid company with no future. Comments (6)
It seems to me that your worried about aaNet and are making wild statements about EFTel because they are obviously a more successful company than Exetel.
Comments (5)
That must be it - I'm really worried about a nothing trading name such as "aaNet" that makes a loss evey month under two different "managements".
Fair cop - you're absolutely right. 1) Please don't comment again until EFTel reports a profit. 2) Please go hug your cuddly toy to ensure that reality continues to be excluded from your life - or what passes for a life in your case. Comments (6)
Eftels published results state that they lost $745,000.00 last financial year, i'm not sure how they can state that they are profitable?
http://www.asx.com.au/asx/statistics/announcementSearch.do?method=searchByCode&issuerCode=eft&timeFrameSearchType=D&releasedDuringCode=M Comment (1)
You have to take into consideration that the 'cuddly toy cuddlers' have a different view of the ASX reports of a company losing three quarters of a million dollars.
To them it's a profit - that's why they have cuddly toys. EFTel bought a substantial loss making customer base which dragged their 'paper' profits in to such a major loss no spin they could summon up could prevent them reporting a major loss to the ASX. Whether such an over staffed and ineptly managed agglomeration of failed businesses can ever make a profit is highly questionable - but only time will tell. What can be said is that their P and L is a huge splotch of red ink to date. aaNet's customer base has only contributed to their publicly reported losses - no matter how the cuddly toy brigade attempt to ignore the only published facts. Comments (6)
Alright John Lane isnt a director but hes a senior manager with EFTel and he says that EFTEl really does make a profit but has to report a small paper loss.
He also says you arent able to read a proper set of accounts and your statements are egotistical lies. Comments (5)
I think you should stop making yourself look a bigger fool than you obviously are.
The only constructions that can be put on your ridiculous statements are these: 1) EFTel has purposely mislead the ASX by providing inaccurate annual returns. OR 2) EFTel is misleading the ATO by submitting inaccurate tax returns to minimise tax. OR EFTel is misleading its shareholders in an attempt to not pay dividends. Alternatively the returns submitted to the ASX (and presumably the ATO) are in fact accurate and show a company incapable of making a profit on a turnover of $A34 million. As for my inability to read a set of ASX figures..... they seem simple enough....EFTel made an annual loss of three quarters of a million dollars and has accumulated losses of many, many millions of dollars from previous years. I'm not sure how you, or John Lane to whom you ascribe the remark, can say I'm lying when all I've done is quote figures that EFTel has submitted to the ASX. I met John Lane on one occasion - he seemed to be not too bright to me, so maybe he gets confused by figures in red. Comments (6)
John Lane publicly stated that "EFTel made a cash profit but recorded a small accounting loss after taking into account paper write-downs".
Im sure he would know the situation with Eftel and aanet much better than you. Comments (5)
If John Lane, or any apparent executive of any public company, had made such a comment he/they would have been very, very silly.
The facts, as stated by the directors of EFTel to the ASX are simply these: 1) Profit in FY2007 was actually a loss of $745,000 compared to a "reported" profit in FY2006 of $799,000. So the acquisition of aaNet (the only material change in EFTel's operations in the FY2007 reporting period) produced a net negative turn around of $1,544,000 - pretty obvious that aaNet made massive monthly losses before and after the customer base was acquired by EFTel. 2) EFTel itself has racked up accumulated losses of a little over $21 million in its seven years of operation - not a pretty picture. 3) More worrying, without knowing the actual 'spin', is the fact that current liabilities of $8,423,000 significantly exceed current assets of $5,584,000 in the 30/6/07 balance sheet as reported to the ASX. Personally, I don't care one way or another about a small WA company and how it runs its operations - I made a passing reference to a defunct Queensland company in the context of similarly failed small ISPs who went out of business recently. You have subsequently chosen to make a series of, escalating in silliness, insulting comments about an irrelevant aside. The comments in this blog are my random thoughts that may, or may not, be of interest to Exetel customers who may, or may not, want to get some sort of view of the issues their comms supplier encounters and considers. You, clearly not an Exetel customer, should have less than no interest in whatever I may, or may not, think about a wide range of issues. These are purely my thoughts and views - they have no relevance to anyone else other than that - one other persons views, opinions and musings. Comments (6)
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