John Linton's Personal Musings

I have been considering some of the implications of a telephone conversation I had late yesterday afternon with someone who had approached us about buying Exetel. Since I returned from my first holiday in two years a few months ago there have been a steady stream of people who have approached us to see if we wanted to sell Exetel to them. Why this should be the case I have no idea and why they bothered I have even less idea. I suppose an unkind view would be that total wankers have to fill in the time between when they arrive at their various offices and the time they go to an early lunch somehow.

In the past these 'approaches' have been completely laughable in that the companies making the approach either clearly have no money or they think that Exetel's owners are so inferior to them in intellectual skills, to the point where they consider we must be functionally innumerate, that they think we'll effectively give them Exetel for some "shares in the joint business".

How !@#$%^ stupid must those sorts of clowns think I am to think they can pay for Exetel using paper that is worth less than the stuff that used to hang on the mythical "dunny door"?

So I have never moved from my view that such approaches are made by wankers and I turn them back with one line emails for the most part - occasionally extending the one line to a paragraph if I'm particularly incensed. I made one exception to this because I wanted to confirm that particular company's involvement in a previous action aimed at destroying Exetel and I figured that company would employ people arrogant enough, and would consider my conversational abilities so inferior, to actually tell me that without even realising they had done that - and sure enough they did exactly that.

What caused me to reflect on Exetel's future was that this latest approach appeared to be, at least to me, to be from a company that had substantial financial resources and what appeared to be some sort of valid reason for expanding its operations in to Australia and New Zealand. Last night and earlier this morning I did some research (alright....I used google to look up some web sites......it sounds much better to say I did some research) on what they did in the countries in which they currently operate.

They seem to be solid and successful with a mixture of aggression and the ability to take longer term views on building market share.

It occurred to me that they will almost certainly establish a presence in Australia and will do that whether they choose in the end to buy one or more current Australian businesses.

In the short time Exetel has been in business (approaching four years) we have seen the continually talked about 'consolidation of the ISP business' that has been going on since the late 1990s. Telstra's recent decision to end its "VISP In A Box" service together with the collapses of suppliers to that market (Veridas, WTG) and the going out of business of all of the smaller ISPs around the capital cities pretty much means that Exetel is the smallest of the ISPs left in business (65,000 customers and revenues of $A3 million a month).

The days seem to be well and truly over for a start up ISP being able to survive the time it talkes to grow financially strong enough to survive and still maintain the ability to offer attractive services.

This view is re-inforced by Telstra's recent claim that it had re-built it's BigPond marketshare from around 40% of all Australian broadband users to around 50% of all broadband users over the last four years - a telling indictment of the 'independent ISPs' that they can't offer a genuinely better/more attractive service than Telstra can.

When we started Exetel we had the aim of building an ISP that would offer the lowest prices in Australia while providing a service equivalent or better than the expensive ISPs - with BigPond the obvious major 'fat cat'.

If we can't do that then I don't see any point in Exetel continuing to be in business - if Telstra can be seen as being so much better than ALL independent ISPs then..........

So the nice (polite) putative buyer pointed out to me that Exetel needed to become a very different company to continue to grow and his company could do that better than the current owners could as they had the money it would need. He also raised the point that with Telstra and Optus both 'throwing money away' to compete with each other they had efectively become the lowest cost providers to Australian broadband users and there was no future for a 'non-carrier' service provider.

Lucky its a really nice day in Sydney today - there will be so many options other than staring at a computer screen to occupy my time over the next few hours.