John Linton It's very difficult to acquire new customers in any business and, from my personal experiences, it's extremely difficult to acquire new customers in the Australian communications business. Perhaps other companies find it easier than Exetel but, if the sort of money that is expended on advertising ADSL offers is any guide, that doesn't seem to be the case.
One of the things I wrote about in these musings was the increase in the number of credit card/direct debit 'declines' in the February and March monthly billing run - a new record, if that's the correct word to use, high. From its inception Exetel's collection processes have managed to collect virtually every last cent owed for the provision of services each month for over four years now. There have been a few months where we have not collected every thing that was owed but they were exceptions.
Since January we have seen that proud monthly performance not being achieved and as we reach the last day of the month today we will set a new record for the cancellation of customer services for non-payment for 30 days. While the number is not huge, around 30, it is more than four times larger than February which was the previous record.
A cancellation means that the end user has been without an ADSL service for a month and, should they now wish to obtain an ADSL service from another provider they will have the inconvenience of either signing up for a long contract or paying for a new line set up fee - as well as dealing with a debt collector attempting to recover money for Exetel.
I realise it's a tiny amount of money and a tiny number of people but I also think that Exetel is more efficient in this aspect of business than any other company so it seems highly likely that this scenario is being repeated by every other ISP and every other mobile and wire line communications provider.
It's also very early in the 'credit squeeze' cycle.
While Exetel operates a very clean payment system with its own suppliers we see many signs of those suppliers becoming more 'diligent' in ensuring that their bills are paid within their trading terms which seems to be an indication that they are seeing a deterioration in their customers paying them.
I suppose the recent 'spate' of "offers to buy" Exetel and the 'chatter' around the industry of major companies 'rationalising' their product and service offerings are further indications that things are getting financially tougher for many parts of the communications industry and it seems unlikely that these issues are restricted to this single industry.
It's impossible for me to extrapolate from the activities of our small company as to what is more generally happening across this industry let alone any other industry but there are many signs of business 'slowing' in terms that I can see and 'feel'. The main 'feeling' I am getting is from the rapidly increasing number of contacts I'm receiving from other people wanting to 'have a chat' about some topic or another. So far all these chats have quickly focussed on "how's it going for you?" type discussion. I haven't gained any positive impressions from anyone in business I've talked to for a while now.
It will be important, for everyone, to see what further signs become evident over the next few weeks and one can only hope the RBA has finished with increasing interest rates at its meeting later this week.