John Linton
I take little interest in the small ISPs around Australia, except for Exetel of course, but I do take some interest in Eftel (probably because of my still white hot hatred of what I beleve to be their unprincipled actions in trying to put Exetel out of business so I was really amused when I read this article yesterday:
http://www.thewest.com.au/default.aspx?MenuID=30&ContentID=50565
What sort of company is this where half the directors appear (based on this article) to think the other half are incompetent crooks and vice versa?
What an unedifying fiasco that must have been - right down to the Old Testamentish " and brother shall smite brother". I wouldn't have liked to have sat at that family dinner table that night.
I'm glad that someone other than me finally noticed that their ASX filing showed the company had a negative current asset/current liability ratio and that the auditors had strongly stated on page 22 of Eftel's FY07 annual report that:
"The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
For the reasons described below, there is significant uncertainty whether the company will continue as a going concern:
i. At balance date the company has net liabilities of $3, 857k and has incurred a loss of $746k after tax in the current period; and
ii. As at 30 June 2007 the company is not in compliance with its banking covenants.
The ability of the company to continue as a going concern is dependant on its ability to:
• Generate sufficient cash flows from operations to meet its financial obligations,
• Achieve future profitable trading operations, and
• Renegotiate its banking facilities.
At the date of this report and having considered the above factors, the directors are confident that the company will be able to continue as a going concern.
Notwithstanding this there is significant uncertainty whether the company will continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report."
It wouldn't be hard to fix Eftel's short term problems, assuming there is still time to do that - all they have to do is to cut their payroll in half and raise their prices by a few dollars a customer.
However, as with all such situations the question raised is why is this small company in business at all?
From what I can see it has no service differentiators and no operational advantages in an industry that is hyper-competitive and very price constrained. Why would anyone buy its offerings which aren't very good value, are ultra-basic in content and aren't delivered over an adequately provisioned infrastructure?
Clearly not enough people do which is why it reported an almost $A1 million loss for the last reporting period and, pending accommodation from the bank that loaned it money to buy up loss making businesses (what a great idea that was), it's in trouble in that it's breached its loan covenants - not a happy situation.
And this is a company that is planning to borrow some $A3 - 4 million more money to deploy HuaWei DSLAMs starting early next year - how are they going to fund that, very complex and demanding operationally implementation?
I filled in the latest ABS ISP questionnaire earlier this week - I'll be interested in seeing the results in terms of how many ISPs there are left in Australia when the results are published in 2008.
POST SCRIPT
I don't usually bother to add to my random ramblings but this person sent an email to Steve Waddington who forwarded it to me so I thought I'd add it to this entry. God knows why anyone would bother to read my personal views and then take umbrage but, apparently, he must be some sort of very sensitive little 'soul'.
So here is his 'foot stamping" demand:
"---------------------------- Original Message ----------------------------
Subject: Exetel - A Bunch Of Unprincipled Scum.htm?
From: "John Lane"
Date: Fri, December 14, 2007 8:24 pm
To: johnl@exetel.com.au
Cc: stevew@exetel.com.au
--------------------------------------------------------------------------
John,
I've just had the attached defamatory material brought to my attention.
We didn't know Lorraine Rose in 2005, and had in fact never spoken to her until 2006, a few days before we met you in your offices. Your conspiracy theory regarding the time when you nearly went broke is completely unfounded. We had nothing to do with your Lorraine Rose difficulties.
I really don't know whether you just make this stuff up out of whole cloth, or whether somebody else has made a fool of you, but either way I demand that you remove the material, retract the allegations, and apologise on your Blog and your forums.
We reserve our rights in relation to all of the matters.
Regards,
John Lane."
I have no idea why this person I met once, by accident, thinks he can address me by my given name but then ........
I guess Eftel must be in real trouble for someone associated with them to think my personal views expressed in a blog are somehow important to them.
But what the hell........
Hey Eftel people , if you weren't involved with Lorraine Rose in her actions, which she insists you were, then - kissy kissy - "I apologise for asserting you were"
You never know do you:
One person says one thing.
Another person says something else.
When a board of directors accuses each other of being crooks and incompetent, at least as reported in the press, how do you know who to believe?