John Linton
......not just to talk of many things (not shoes and ships and sealing wax nor of cabbages and kings) - but to make some serious assessments of what is most likely to happen over the coming two financial years. Each time we begin the year's major planning process (for the coming financial year) we start by trying to assess what 'market conditions' will be over the next four quarters and the most likely 'trends' we will encounter. At this time last year we predicted pretty accurately (it was pretty damn obvious) that FY2011 would be an extremely difficult year for companies such as Exetel and also for companies much bigger than Exetel.....and as FY2011 draws to a close that 'prediction' has proven to be 110% (or more) correct.The difficulties encountered over the past twelve months have been severer than our most pessimistic views in May 2010 'predicted' and, if anything, conditions generally are worse now than they have been to date.
Looking forward over the next 24 months is not looking any easier than it did 12 months ago which means, if that assessment is correct in the various 'areas' assessed, we have to make a series of very, very tough decisions. One of the first 'bellwether' scenarios being assessed at the moment is the ongoing supply of 'NBN2' fibre services in Tasmania. These have been very poorly received to date even though NBN(Tas)Co makes no charge for the actual monthly port rental. The main reason is the sheer stupidity of the political pork barreling in selecting three small 'towns' which had very little demand for such services as the initial location for fibre services (totally decided to improve Tasmanian State Labor election chances and the next federal Labor election chances resulting in spending over $500 million dollars to connect far less than 1,000 users. It is an early indication of the danger of mixing cheap politics with technology decision making particularly when the overarching egotism of Labor politicians is the key component of the decision making.
If we were to look at the lack of success Exetel has achieved to date and the lack of success the other ISPs who have made fibre offerings in Tasmania (on the assumption that the figures Stupid Stephen has provided are accurate) we would be foolish to continue to offer such services there. Of course this may positively change once NBN(Tas)Co 'lights up' additional areas where there is more demand but it is approaching 12 months of that not happening with only vague promises and a great deal of talk of 'budget difficulties' which don't give us much confidence to continue to lose money in the current bleak conditions. We either have to invest more money or cut our losses in the near future. Right now it would require a lot of persuasion to invest more money.
And that scenario, while not being very large, pretty much describes more than a few other scenarios - no positive near term future outlooks therefore requiring much longer term planning than we have ever been able to do in the past. While being neither a walrus nor a carpenter we do have to discuss some very difficult things over the next month or so and then make some pretty bloody minded decisions on future directions for Exetel as a supplier of communications services. I doubt that it's only Exetel holding similar views. The only positive aspect, if this outlook is correct, is that it will pose equally tough, perhaps tougher, decisions for most of the companies with which we compete.
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