John Linton On January 1st 2008, Exetel will commence its 5th year in the provision of communications services to the Australian marketplace - always assuming the company continues to 'survive' over the next three months.
When we did the original planning for Exetel we didn't go beyond the first four years because it seemed to be fairly pointless to attempt to forecast the changes that would take place so far in to the future. We extrapolated some basic figures for the fifth year but 45 months ago that was not a sensible basis for doing anything other than providing a 'tidy' looking set of spreadsheets for a five year period.
In hindsight, our predictions of pricing and product changes were pretty reasonable and our assumptions about what, we then perceived to be competitors, would do weren't very far out. However all of that is now in the past and we are a little late in starting preparing the plans for the next four years.
Planning a commercial entity's objectives, actions and financing for the second phase of its 'life' is both exciting and daunting and, at least for me, unbelievably difficult.
It would seem obvious that all that would be needed to be done would be to extrapolate the current fully documented and understood trends in the same way that the original planning was done. That would be easier because Exetel now has 45 months of known 'history' and all the guessing of what would happen over the past 45 months has now turned in to examinable reality. There is one, at least, major problem with that view in my opinion.
That is - what is really going to happen with the wholesaling of base communications services by the current carriers with whom Exetel deals and what new opportunities now exist for a company like Exetel that didn't exist when we were a zero revenue/customer start up?
Exetel's first four year's plans were based on buying wholesale services and reselling them in pretty much the same way as every other such entity did. That has been, to date, relatively successful in that:
a) We still exist whereas so many other companies with similar objectives that were around before we started or started up after we commenced business have disappeared.
b) We've made a little bit of money (major stress on "little") rather than losing money.
c) We have a much better relationship with our bank and most of our current suppliers than we did when we started.
But it's taken a huge amount of effort by a very few people to achieve this and, realistically, that effort can't be continued for another four years.
Also the wholesale model doesn't hold a lot of attraction at any sort of size much beyond where Exetel is currently planned to be in 9 month's time. By that I mean - an awful lot of effort goes in to making each month's revenue, the vast majority of which is immediately paid to someone other than Exetel's employees or shareholders.
So..........
......................................that's why I find it so hard to make the judgements as to how we do the two/three things that need to be done, in my opinion, at this time of Exetel's 'life'.
The things exercising my mind (as I continue to stare morosely at the blank spreadsheet cells in front of me) are how to cut the current costs of providing data and other services in half and what level of capital invested in what technology will allow that to happen. The third thing is - can/should Exetel do this by itself or should it find a partner(s) to do "it" - when "it" is defined enough to quantify the timeframes and risks.
The two most obvious things that seem self evident in aiming at the cost reductions are, of course, buying ingress/egress bandwidth from Southern Cross (or some other entity) and connecting customers via wireless technology that is progressively deployed and owned by Exetel.
All I need to do now is work out how to do that and, very importantly, how to fund it and Exetel's next four years will be very exciting (hopefully in a positive way) and might even produce some profits greater than "little".