John Linton
......when Easter falls in April meaning that, with Anzac Day, there are three public holidays plus the 'drag along' extra leave days plus it's a thirty day month.....so we have been fortunate to sign our largest, yet, corporate data network and all but our ADSL sales have held up remarkably well. Our largest business sale contained the first 100 mbps link we have ever sold and, as so often happens in businesses like ours, a day later we sold two more to a company that had been a long term 'prospect'. We also recorded the first time we made ten sales in one day - so in many respects April may well turn out to be an 'ordinary' month rather than a sub-ordinary month like December and January.
We have been 'waiting' for our new, young sales force to sell the first 100 mbps links before proceeding to a new phase, for Exetel, of addressing much larger businesses than they have done so far. Not that there is anything particularly special about 100 mbps links (Exetel doesn't have any in its own business with the standard base level being 1 gbps with the first 10 gbps now on order) but symbolism in creating a new sales force is more important than many people think it is. We realise that very large corporations and government departments would be reluctant to give a company of Exetel's size a big 'chunk' of its data networks but we see a fairly reasonable chance of bidding for a part of their business that is not 'crucial'.
A business acquaintance of mine within one of Australia's largest accounting practices gave me some insight in to how badly ripped off such organisations are when it comes to their total naivete when buying data services. We were discussing other aspects of Exetel's business when I suggested to him that he could well consider Exetel for a standalone IP feed as a back up to his current major carrier supplied network. He said he would find out what opportunities there may be and, true to his word, he called me over the weekend saying there were no opportunities as they had recently re-signed a new three year contract and in any case their current supplier had massively reduced their IP price from almost $A400.00 per mbps to $A220.00 per mbps and they were supplying the back up link at a mere $A135.00 per mbps providing it was only used for emergency back up.....a great deal indeed.....for the provider. I ruined his 'triumph' by saying that Exetel would have charged him around $A90.00 per mbps for the main link and around 50% less for a back up service.
I don't know how many, idle, IP back up links' there are in corporate and government organisations around Sydney alone but I would guess at around 400 with another 1,000 or so in the other States and probably at least 100 in Canberra. If all those organisations are being ripped off like my acquaintance is there would be a fairly large market to address....which Pipe has been doing for some time and doubtless TPG will continue to do now it owns Pipe.....though Pipe's pricing as it stands currently, at least from what we have seen, isn't very effective/competitive in terms of what should be able to be offered in today's marketplaces. We have mulled over some IP pricing for the new financial year - both as back up circuits and as primary circuits and think we can construct an effective 'campaign' to Australia's "Top 1,000" companies plus the six State Governments and the Federal Government. I would like to sell at least one 1 gbps IP circuit over the remaining two months to confirm such a plan would be possible - however that would just be the icing on the cake.
We already have several very large organisations using Exetel for primary data links and an increasing number of those have added links as they became more 'comfortable' with Exetel as a supplier and some of those customers have been with us for many years and our network has become far bigger and far more redundant since those earlier days. So we will give it some more thought between now and June 30th and make a better assessment of how much of that 'market place' we could sensibly address and acquire in FY2011 but even 2 or 3% of that opportunity is more than we are achieving at the moment - in revenue dollar terms.
The other major advantage of such a program is that the more IP we buy for corporate customers the lower the cost becomes for residential customers.
Everyone knows that......
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