John Linton
......the 'recession' has actually been gradually getting worse for over two years outside the mining and mobile telephony industries....one view I heard articulately expressed yesterday.
I don't seem to be able to get anything right over the past six months so I am beginning to wonder whether I should be involved in making any more decisions....it would be nice to think that was going to be possible in the immediate future. So I resorted to calling up a long term acquaintance who also happens to run a communications company a little larger, and much longer established, than Exetel to get his opinions and advice. I don't ever recall doing such a thing since I arrived in Australia as an almost 18 year old some years before the first fleet struggled in to Sydney Cove. We have exchanged views two or three times a year on average over the past 10 plus years since we ran into each other at a particularly uninteresting seminar and discovered a mutual interest in wildlife protection.
His views on the current state of the wire line based communications services in Australia is that residential users have less money generally than at any time in the past ten years and a large percentage of businesses, at least those that actually pay attention, are under quite considerable pressure in several areas including receivables and order book current status and outlook. His company is not retrenching staff but has done no hiring since early in 2009 and has not been replacing people who have left over the past 15 months - though he said that their staff losses over that period are less than half of the usual level because there are very few jobs available in our industry at the moment and that has been the case for some time.
His views were that costs in the communications business in Australia had increased more than most people had expected during the period that interest rates were so low and that margins had tightened producing unexpected profit squeezes for his business and for other businesses he had some knowledge of. So we exchanged views for the better part of an hour over a couple of very pleasant glasses (supplied from his office bar) and I left to wend my way home. I'm not sure I got that much from the pleasant and, on his part, insightful, conversation other than other companies are facing their own different sets of difficulties which he believed are based on the two year weakness in the overall economy outside mining and mobile telephone services.
It isn't much comfort to me (not being involved in mining or mobile telephone services) but perhaps fortunate not to be involved in a plethora of other services that don't seem to be doing so well at the moment. He did make a peripheral point - that in our case the Telstra/Federal Government 'negotiations' would not have improved residential business for companies like Exetel - he said he, as a long term Exetel ADSL user, had had four different direct approaches to 'come home' to Telstra over the last three months - each 'offer' improving on the previous one. As he joked on the way to the lift; "pretty soon Telstra will pay me to use their service if I stop using Exetel".....
....and I think that sums up the current issues. Telstra, and more than a few other companies, have become so concerned about their eroding or stagnating customer base that their combined actions are beginning to create a completely different supply/buy demographic that I can't seem to understand at all. I have thought through this situation so much over the past six months I even dream about it some nights. It's long past time to find a 'solution' and move on to more interesting things - or perhaps the reality is that my aging brain just cant comprehend and compute the data relating to residential internet any more?
Maybe we should now concentrate on how to sell fibre services - We received our 40th application for a Point Cook service earlier this morning after five days of offering the services. A very small number you may well think - and quite rightly so. However in the time ADSL services have been available in Point Cook we only have 72 customers and, at the current rate, we will exceed that number in less than a month. I will be interested to see what happens when we offer services over the Opticomm fibred housing estates where, as far as I know, other providers have been offering fibre plans for some time.
Perhaps there's a message being partially obscured by so many difficult to understand incidents? - maybe I'm too tired to see it?
PS: Some confirmation that it isn't only me and my friend who think the economy isn't the best at the moment:
http://www.smh.com.au/business/consumer-confidence-dives-most-since-gfc-20100519-vd7a.html
http://www.smh.com.au/business/clive-peeters-placed-into-administration-20100519-vd48.html
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