John Linton .......that certainly is the question of the day.
I met with one of our major suppliers yesterday to progress our discussions on how we could possibly work more closely together on delivering business services next year. We have been 'planning' this 'association' for almost twelve months now and are getting closer to a go/no go situation. I still have some reservations about just how quickly we can build this concept into a practical reality but it remains pretty much on track for a February 1st 2012 'start'. The last big 'hurdle' has yet to be jumped and we will put quite some considerable effort in to clearing that last obstacle between now and Christmas - all being well we will take a deep breath and give the green light. I am not sure how much leeway we have to make a 'no go' decision on this initiative having already committed to the extra floor space and expensive fit out to house the additional sixty people required over the next few months.
Something that has been considered for some time now is whether we should emulate the Danes of the dark ages and, at least metaphorically, "burn our boats" to ensure the waverers are totally committed to their new lives and have no chance to return to their old 'jobs' in our case. For some time we have been unsure as to whether we can continue to provide retail ADSL services that provide a clear advantage to our residential customers over those offered by even Telstra who seems to be able to do 'deals' that we cannot match. The latest one is offering fibre services in Point Cook that are, yet again, at below our wholesale buying cost. I think it may be the fabled "straw". There seems very little point in continuing to wholesale Telstra ASDSL services when Telstra continues to 'attack' our user base offering ADSL services at below our wholesale cost. We really should take the attitude that we have played a small part in bringing about this change in attitude by Telstra and we can serve no further purpose and should devote the largest percentage of our time and resources currently devoted to helping Telstra to some much more useful purpose.
Exetel has offered residential ADSL services for almost 8 years now. We began this business on the basis that we could offer an ADSL service with more downloads for a much lower price than BigPond but still provide an equivalent or better level of speed and service than any other provider to the residential market place. That remained the case until Telstra Retail began their "win back"/"welcome home" assaults culminating last year in a marketing spend of some $A800 million to acquire new customers. Telstra's huge marketing expenditures compelled other providers to lower prices/offer inducements to protect their own customer bases (largely unsuccessfully) and certainly Exetel was forced to do the same. Irrespective of all 'emotions' - just how sensible is it for a company like Exetel to offer residential ADSL services when Telstra offers them at a lower price?
Although I think I see what might well be the beginning of the end of these depredations - the churn aways to Telstra and TPG have reduced to a trickle while the churn backs from those companies have begun to slowly increase to more than the churn aways - the concern is that we have to put in far too much of our resources and time to accomplish very little in terms of either growth or profitability. That has been OK to date but now we are faced with rapidly growing a new business and the justification for devoting the amount of resources we currently do to residential ADSL is becoming harder to justify. While we may well end up making no such drastic decisions our modelling, for the first time, includes a scenario where there is no Telstra ADSL revenue or expenses.....I emphasise that is simply one scenario but the fact that is there at all means we have come a long way from the thinking that was in place in November 2003.
So the current planning 'season' is more 'fraught' than usual with some, for us, very big decisions having to be addressed and, as always, the time to make such decisions is rapidly diminishing.
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