Vox Telecoms is able to invest more into products for long-term growth than it was able to do as a listed entity, and will launch several IP-based offerings as it seeks to tap into the move to cloud.
Recently-appointed CEO Jacques du Toit says, in time, the company hopes to move all its products to IP, as it sees cloud as a catalyst for growth this year. Vox is adding a WiFi product, growing its virtualisation offerings, and pushing hosted PABX, he says.
Du Toit explains that the investment in products will make Vox "sexier" in future, although it will slow down growth in the shorter-term.
Flatter structure
Being a listed company has a tendency to drive short-term behaviour to please investors, and the company became more long-term focused after it left the JSE, says Du Toit. A year after it left the bourse, it started merging all its units into one.
Vox is now consolidating @lantic into the flat structure, and will do away with the brand over time, says Du Toit. Previously, the company used to compete through several brands, such as Vox Orion, Vox Datapro, Vox Amvia, @lantic, Vox Telepreneur and Vox Pureview.
Du Toit explains that this move will drive cost savings, as all customers can be managed off one system, and will also grow its small and medium company customer and single-office home-office base.
@lantic has a strong base in the smaller business market, says Du Toit. He adds this is where Vox's focus is in a bid to drive growth.
Recovering
Du Toit says the company is looking much better financially than when it delisted. Its gross profit and profit before tax have improved, and are close to where they were before it was hit by a "perfect storm," he says.
Vox received a R499 million offer from a consortium in the middle of 2011, and left the bourse towards the end of the year. At the time, it explained it will be better able to focus on its strategy without being encumbered by listing requirements.
The group added its share price had performed poorly, limiting its ability to conclude deals, removing value from employee share incentive schemes, and negatively affecting employee morale. In the first half of the 2011 year, profit was hampered by a 29% drop in call termination rates in March last year, which contributed to a revenue decline of 11% and a slight drop in net profit.
Share slump
Vox went through a "perfect storm" a few years before the delisting as interconnect rates fell, the Dealstream fiasco wiped 50% off the value of its shares - which never recovered - and mobile operators cut out connection incentive bonuses at a time when the global economy was fragile, says Du Toit.
Despite the storm passing, notes Du Toit, Vox's share price never recovered and, when the company delisted towards the end of 2011, its stock was at 45c. "Everything happened in the right sequence, but the market didn't like it."
In September 2008, after revealing that Dealstream, which had failed, was holding R30 million of Vox's cash, its share price lost 50% of its value, dropping from R2.20.
Vox had used Dealstream to acquire treasury shares in the open market, and the R30 million cash held by the broker at the time of its collapse arose from the disposal of Vox treasury shares. Several staff lost money as a result of the collapse, which affected morale, says Du Toit.
After the Dealstream issue, interconnect rates started coming down, prompting Vox to move traffic onto its own IP network, Cristal Vox. However, this took some time and, in November 2010, Vox wrote down its least-cost routing (LCR) business Orion by R809 million on the back of lower mobile termination rates.
Vox is still doing 40 million minutes a month through SIM-based LCR as it does not make financial sense for many smaller customers to move, says Du Toit. Cristal is moving 60 million minutes a month.
Share