John Linton .......'dawns', despite the weather forecast, without a breath of wind and with, almost, cloudless skies. Pity that I awoke to it because of the sounds of a currawong (actually what turned out to be two currawongs) trapped in our bedroom chimney. Eventually they both 'fell down' in to our bedroom hearth and with no encouragement flew away through the opened windows. Just as well because when we called WIRES for advice/assistance it turns out that their 'support centre' doesn't open until 9 am. The monthly recurrent figures also brightened the day, a new record amount for a month where we actively reduced our number of ADSL customers. The reduction in ADSL residential revenue was more than made up by a strong increase in corporate revenues from several different corporate services and the profit on corporate services is many, many times greater than that of residential services - especially when the vast majority of residential users that left us for greener fields actually lost us the most money.
While it is always sad to lose any customer (with a few exceptions) it has become necessary in these much tougher times than any I have ever been involved in while participating in the Australian communications business. As I have said before we now lose money providing ADSL residential services and we simply can't afford to do that. If the 1,000 or so residential ADSL customers who lose us money find another provider that better caters to their needs than Exetel does then they will be happier and we, and the other Exetel ADSL customers, will be happier. If we can accomplish that 'reduction' by replacing residential revenue that loses us money with corporate revenue that makes us money then both 'parties' will mutually benefit.
Our young corporate sales team set another monthly sales revenue record yesterday which was very pleasing and our corporate wireless sales were also a record which was an interesting result. I met with two of our major suppliers yesterday to have preliminary discussions on what we, jointly can do to increase the sales rate of corporate services. I did point out to both suppliers that to actually achieve what had been accomplished to date had been far from easy and, for both of them, to talk in terms of "we have planned for you to double your sales" sounded quite odd to my ears....I had to make the point that we weren't planning to double our level of corporate sales pe month until very late in the financial year. It was a reminder of how suppliers think about their wholesale customers.
One of the new services we are introducing for corporate customers is 'pure IP'. We have never considered selling such a service before because we have never had a a particularly good buy price and, obviously, the companies who sold to us could sell to other buyers at the prices we bought at - or below in many cases. However there are a number of changes in the Australian marketplace that have allowed us to contemplate providing IP to commercial customers using the process I alluded to in a past musing that had allowed an unknown company to enter a market dominated by US multinationals and make a major impact. The set up costs are pretty scary in these difficult times but the analysis we are able to do shows there is a pretty large opportunity.
We have been getting a steady stream of enquiries for this 'pure IP' product just by running a very small 'ad' on our web site and we have successfully installed the first customer for this service (in Tasmania of all places) and now have two more orders we expect to receive very soon. From what we can see the current suppliers of IP services to corporate users offer services at per mbps prices around treble what we can sell at and make a sensible return. It's far too early to make that a firm statement but it's based on the few serious enquiries/sales made to date. How it will turn out over the coming year is hard to predict but we would see the same problems for the current suppliers as we did for current SHDSL providers - they have a customer base they have been ripping off for a long time and are very reluctant to provide the cost savings to those customers which recent price reductions have made possible. So a new 'product' for us and one that has interesting potential....a long way to go though.
I hope to finish the planning for FY2011 before the end of this week - running a few days late as I am teaching other people how the Exetel financial planning process works - and I am encouraged by the execution of the first year results in the long term changes we are making to Exetel's business - still a very long way to go.
Copyright © Exetel Pty Ltd 2010
ABN 350 979 865 46