John Linton
One aspiration that is figuring in Exetel's planning for FY2008 is a significant increase in the number of VoIP customers. To start producing growth in this aspect of our business we negotiated better pricing from our carrier and reduced our current VoIP charges to our customers by around 15% recently.
As part of the 'research' being done on the likely VoIP marketplace offerings in the coming 12 months I have been reading up on what other providers to the Australian marketplace are offering and what they might offer in the future. The two self proclaimed "leading Australian VoIP providers (Engin and MyNetPhone) recently published their annual reports which I read over the weekend as part of my information gathering exercise - and they make sober reading for someone like me who is looking for ways to increase the amount of VoIP business.
Between these two companies, in the period 1/7/06 to 30/6/07 they managed to achieve the following.
Grow their combined user base to 112,000 from 62,500
Grow their combined revenues to $A21.1 million
They managed to lose a combined $A17.050 million
They also spent a combined $A6.155 to add a claimed 55,000 net customers during the period (though these figures are very rubbery because they appear to contradict the figures they announced in their last year's public statements).
The other, probably more worrying factor having spent so much money acquiring new customers (an average of over $A120 per customer), is their ARPU which (at the most optimistic estimate) fell to $22.25 for Engin and $15.50 for MyNetPhone. The reason I say worrying is that smaller VoIP players in Australia are now following the mobile companies lead and offering "all you can eat" VoIP plans at the $15.00 per month for unlimited local, national and Australian mobile calls.
Now, while these smaller VoIP providers will not be spending the millions of dollars on advertising that the "VoIP market leaders" did in FY2007 it doesn't take too many press comparisons and reports to reach a pretty fair percentage of current and likely future VoIP buyers. So Engin/MyNetPhone are faced with more pressure on their ARPU (if they re-act to such offers by modifying their current plans) and the loss of even more ARPU if they don't react and their higher spending customers see the compelling financial advantage of reducing thei VoIP spends by moving away.
Of course the "$14.95 for all you can eat" offers only make sense to the provider if the people who sign up for them spend less than $12.00 a month in supplier call costs - a path trodden by the mobile companies with varying success over the years and one now enthusiastically being embraced by the major wire line companies.
As with the DSL market, I just can't see how you can get a return by spending $120.00 to acquire a customer that may not stay with you very long and even if they did would take more than 2 years to get your money back - let alone make a profit.
Exetel will have to come up with something else.