John Linton
...I personally only benefitted from lower interest rates, cheaper petrol and an appreciating Australian dollar - and Exetel benefitted from taking a cautious approach to business for over a year because of all the hype in the media as well as falling prices of many of the things we buy.
In December Exetel has had its 70th successive record recurrent billing month and 5 of our 10 'business units' achieved all time records in November. We also finished November with a record amount of money in the bank after paying every cent of every bill sent to us resulting in zero unpaid bills. This was despite lowering our ADSL1 and ADSL2 prices and drastically reducing the revenue we get from excess usage charges by raising the 'off peak' download limit and re-instating the 12 hour uncharged period for some 25% of our current users. There has never been a time, in the almost six years that we have operated Exetel, that we have ever been in better 'financial shape'.These results are despite Exetel adding 50% more personnel over the year, absorbing the costs of moving offices and, and for a modest company like us, an expensive new office fit out plus the significant costs of fitting out a small data centre in the new office.
So what was this 'recession' that so many column kilometers were devoted to and so much money was frittered away to avoid?
If I was inclined to self congratulation I could say it was because of Exetel's diligent management's tight financial controls and perceptive analysis of the ways the markets we operate in would move and our astute micro management of our product and service pricing. However, with the exception of the $3.00 account surcharge on then ADSL plans introduced some 12 months ago we actually didn't change anything we did other than to increase our personnel and from March 2009 onwards and continue our policy of passing all savings on to our customers by continuing to lower our prices (without any account surcharge). We actually followed the reverse policy of seeing a doom and gloom scenario as being the time to expand business while the overwhelming majority (with the exception of TPG) appeared to take a much more conservative views of business life - a recommended practice for small and 'agile' companies. We had a record profit result for the September quarter, by a long way, and now find ourselves a little above our planned revenue growth for the first five months of the FY2010 financial year.
So that was my five minutes of 'all is right with the world' reflection.
I have noticed that the ADSL business is tougher than ever and I would expect that it will get even tougher as Telstra tries to recover from its customer erosion and the other ISPs, in turn, try to deal with the reversal of the free ride they have had while Telstra maintained their ultra high pricing. However we have spent more money increasing bandwidths (IP and connectivity) and routing power over the past 3 - 4 months than we have done in any single 12 month period to date and have transformed the topology and resilience of the network completely over the past year to a point I never expected to see - this was only made possible by the huge reductions in cost of both IP and high end equipment brought about, at least in part, by the strength of the Australian dollar plus the periodic shift downwards in pricing due to the deployment of new technology by a number of carriers and providers.
We took the financial gambles early in 2009 of deciding to invest in buying our own premises, hiring and training a corporate sales and support force in Australia and doubling the number of support people we had in Sri Lanka as well as investing in the creation of a wireless broadband business. In 'good times' this would have been a 'brave' set of initiatives but in the 'depths of a recession' it would generally be judged as very unwise. We took the view that, although we personally couldn't see any sign of recession in our business, it didn't really matter because if there was going to be adverse threats from recession we would benefit rather than lose and if there wasn't going to be a recession then we shouldn't remain cautious and miss the opportunity to increase the speed our development. As it turns out there was no recession and we managed to grow our business in new directions and still end up better off financially than we were at the start of 2009 - by a fairly large amount in all measurable areas.
So it's now the time of year when we re-examine our current financial year business plan and make decisions on how/if we revise our financial year plans and objectives. Our review of the Sri Lankan plan which we completed in November was to increase our investments there and to continue to grow the number of personnel beyond what was planned. In reviewing the Australian plan we have more options and some hard decisions to make on both 'products' and organisation and personnel. We also have just about outgrown the new office space we bought and only moved in to on June 1st (one very concrete sign of our lack of planning ability). It will be an interesting period in Exetel's 'life' and making the correct decisions is going to be more important than at any previous time because, probably for the first time in six years, we have many choices where in the past we pretty much had either none or very little.
Never a dull moment in the data communications business in Australia.