Alex Kidman13 June 2008, 3:06 PM
Broadband users are rushing in droves to rid themselves of Telstra line rental, says a delighted iiNet.
As a publicly traded company, iiNet has an obligation to its shareholders to divulge how the business is doing, and it did so today through an Extraordinary General Meeting Trading Update, largely centred around the company's recent acquisition of Westnet and gaining shareholder approval for the complex financial kinds of waggling needed to get those kinds of deals done. While the report is full of the usual bullish market-speak — phrases like "leverage pre-synergies" abound — there's also some very interesting meat amongst the fluff.
Iiinet is claiming Naked DSL subscriber numbers of "over 23,000" customers, from a total customer pool on iiNet DSLAMs of 170,209 customers. So, roughly thirteen percent of iiNet's customers are now living without a PSTN phone line. The report claims that Naked DSL is now driving growth, although no figures were broken out to address the percentages of customers choosing Naked DSL over other products on iiNet's own network.
APC spoke to iiNet's MD Michael Malone, who stated that the company was signing up "around 1,000 subscribers to Naked DSL a week". Back in February, Malone stated, the company had "around 8,000 Naked DSL subscribers", but the success of the product had surprised them. "We initially saw Naked DSL as a very niche product", he said. "We expected that the tech geek crowd who loves broadband would go for it, along with Generation Y and their mobile phones. Instead, it's appealed to a much broader audience who don't want to pay line rentals. They see it as dead money. It's not so much to do with saving money as it is not wasting it."
iiNet's recent acquisition of WestNet bears some interesting news as well. WestNet will launch ADSL2+ services in the next half of the year, and the company expects that iiNet's existing dialup customers (all 106,968 of them) may be able to get Westnet's satellite services. That 106,968 figure is an interesting one too, as although iiNet has been able to show growth in dialup subscriber numbers — something you wouldn't really expect in this broadband age — it's done so only through the acquisition of Westnet.
In December 2007 iiNet only had 82,721 dialup subscribers, and those numbers dropped for the May 2008 report, bolstered up to 106,968 by the inclusion of Westnet subscribers. While the figures aren't broken out, roughly a third of the graph shown for dialup subscribers consists of Westnet customers.
Westnet is also responsible for a huge spike in the number of iiNet customers actually connected to a Telstra DSLAM. Recent iiNet only figures had customer figures of some 63,546 in December 2007, and a similar looking figure for pure iiNet customers for May 2008. Add in Westnet, however, and the numbers jump to a hefty 200,049 customers, making off-net (that is, Telstra-DSLAM based customers) the largest single group of iiNet's customer base at the present time.
For those who like the financial pages, iiNet had an underlying EBITDA in excess of $46.0 million for the 2008 financial year, up 17.6% on 2007. The rest of us can wake up now.
The EGM report finishes out talking about the combined customer service systems of iiNet, under the headline of having "Naked Ambition to be #1 in Service". It claims an average answer speed in May and June for iiNet customers of under a minute — iiNet refers to it as "near zero call wait times", which anecdotally doesn't tally at all with this writer's experience of iiNet customer service.
The company currently has call centres in Auckland, Sydney and Perth — Malone referred to iiNet's strategy here as "chasing the sun" but claimed that they were "at full capacity with all of those locations".
With that in mind, iiNet's heading further west again, but not in the all-too-predictable direction of Bangalore. Instead, the company will launch a full call centre based in Cape Town South Africa by the end of July. Currently Cape Town staff are undergoing twelve weeks worth of training, according to Malone, with some email enquiries being handled from there.
Malone admitted that working in South Africa was "challenging", especially due to the limits on broadband within the country, but that it was a worthwhile endeavour for iiNet to pursue. That's partly due to iiNet's Western Australian base (or as Malone put it, "The Perth Job Market is pretty tight"), but also so that "Once our Cape Town centre is up and running, no call centre staff will have to work after 8pm."
The full EGM report will be available at according to iiNet's press release, but was not available there at the time of writing.