John Linton I made my last call for this trip to one of the SMS providers whom we had attempted to do business with on an HSPA service for Australia last year but had failed to reach an agreement because of the required volumes which were much too high for Exetel to commit to. However, they were/are very nice people and I made arrangements to visit them if they were available before I left Australia.
As it happened one of the people I knew was in London so we had a brief meeting late this afternoon. SMS is a big and constantly growing business in the UK as I imagine it is in the rest of the world. In the UK they send around 1.4 billion text SMS each week and that volume is continually increasing. The company I met with account for almost 15% of the UK text SMS sent per month and, unsurprisingly, have pretty good international SMS buy/sell arrangements with many countries around the world.
Exetel introduced an SMS via broadband service in the second half of last year which has proven to be increasingly popular with our residential and business broadband customers and even more popular with 'stand alone' large business customers who send tens of thousands of SMS each month in Australia. While it may never be a major revenue (or profit) contributor to Exetel it is a very useful, low cost 'add on' service for our customers and has proven to be a good 'door opener' for gaining new business customers.
We currently buy SMS services from Australian wholesalers at reasonable prices for our relatively low volumes at this stage (sub 500,000 per month). These arrangements suit Exetel (some business and government clients insist on an Australian SMS gateway) and our constantly increasing monthly volumes suit our wholesale supplier. Our buy prices are good enough to provide our casual residential and business users with an SMS via broadband service for 5 cents per SMS with rates down to 3 cents or so for large volume commitments (pre-paid).
I don't think we can do any real business with a UK provider below 2 - 3 million SMS a month but if we ever reach those sort of volumes then we can cut our per SMS buy pricing by over 80% and provide our Australian users with an SMS services for around 1 cent per 160 character SMS and make a significant (percentage) profit! It just goes to show you what enormous profits the mobile carriers in Australia are making on SMS services.
So we are reaching the very end of our UK visit which has been immensely enjoyable and very productive in business terms. It is a very different place to do business than Australia and, in many ways, a much better place to do business - even if you represent a start up company as I have been doing.
I think we will be able to make a much better judgment as to how/if/when an Exetel operation in the UK could benefit the Australian business and also the Sri Lankan business (the time difference between the UK and Colombo is almost identical - the other way - to the time difference between NSW and Colombo).
There is still so much to do in Australia before we can consider Exetel to have become solid enough and well run enough to be able to operate without the current level of minute by minute management that is currently used and we have barely made a start in Sri Lanka and have a great deal to learn about how to operate effectively there. So we won’t be making any decisions on doing anything in the UK/EU before the FY2010 year but at least we know enough now to make far more solid plans.
So much to consider - so little time left.