John Linton
....(apologies to Admiral Farragut).
I completed the review of the Exetel FY2010 business plan between a very pleasant Australia Day family lunch and the Murray/Nadal match. I ended up making no changes although I believe that the Australian economy will not be particularly strong over the next six months and all of the signs that I can vaguely understand mean that Australian exports will not continue to boom with the PRC running out of infrastructure to build and their recently announced credit controls signaling a change in money supply policy which combined with the ongoing problems in the USA mean that there will more likely be a widespread recession than not. In other words I really have no clue as to the future changes to anything and how they may or may not effect the Australian communications industry.
I am basing the various decisions of not really changing anything on a number of different factors that are also individually influenced by the fact that we have already had not only the best January we have ever had but also the best month we have ever had by a fair distance in terms of new customers and larger volumes of usage of some of the ancillary services. It's also necessary to consider that we have also had the highest expenditure month in our 'history' due to the continued rapid growth in personnel and the continued growth in network bandwidth and facilities.....and that is a cause for double and triple checking.
I haven't changed my mind that the ADSL market is saturated and the coming 'price wars' between the larger ADSL suppliers will continue to make negative impacts on the profitability and rate of growth (or should that be the rate of decline?) of current ADSL customer bases but I think that Exetel has reduced its own ADSL prices to points that even the bravest of large suppliers (and I seriously doubt there are many/any) will have a lot of trouble reaching so we have been able to see the 'hit' that involves in current ADSL profitability - and that is for a company that operates on the slimmest of margins. It isn't a pretty sight but better to get used to working with even slimmer margins than in the past than suffer the consequences of not doing that.
Similarly, I continue to believe that wireless broadband will continue to grow at the expense of low end ADSL as well as being used in every laptop/notebook and an ever larger percentage of mobile phones. While the profits to be made from wireless broadband (at least for companies like Exetel) will continue to be zero or negative I think that can be turned around as the months go by. As part of a 'complete' suite of communication services it has to be made a non-money losing offering some time in 2010 - just how that is to be done I don't really know right now.
In the same way our VoIP business has continued to grow at a progressively faster rate each month and we are now seeing much more interest from corporates in our VoIP offerings - though sales so far have only been to the 'braver' commercial entities. I expect our residential VoIP business to grow much faster in 2010 than it did in 2009 as the take up curve steepened appreciably in the last half of 2009. Personally I use VoIP on my mobile and from our office and my home land line and I can't see why any sensibly competent person wouldn't do the same. It amazes me that so many sensible people I know in business still use PSTN/ISDN and still pay, no matter what 'great deal' they claim to have, so much money each month and, more stupidly, do without all the benefits that VoIP provides that conventional telephony simply can't do.
Our corporate business continues to grow very quickly and by the end of February we would expect to have twelve fully operational corporate sales reps bringing in over 100 new corporate customers per month and if we do in fact make that happen we will aim to grow the corporate sales force to 24 by the end of June. Our overall aim is to be bringing in around 400 new corporate customers a month by early 2011 and although that sounds very, very ambitious we are basing it on the levels of development we achieved in 2009 in taking a 'concept' to a deliverable reality. We are reaching the ability to provide a "total communication services solution" with our 6 'add on' services and we will make more effort to use that advantage over the next few months as I don't see any other communications service company being able to deliver the complete range of services that Exetel has gradually put in place over the past three years - perhaps that's because I don't look hard enough.
So - an aggressive approach to a tough year - hopefully based on a sensible understanding of the realities of what may happen over the coming few months. I guess we also put our money where our mouth is over the last 48 hours and decided to invest more money in Exetel by buying additional floor space to accommodate the personnel growth we need to make the 2010 business plan a reality.