JSE-listed TeleMasters is experiencing delays in converting its 600 long-standing clients to its new telecoms platform, which dragged revenue lower in the first three months of the year.
However, TeleMasters notes that its efforts are paying off as it has seen an increase in billing on its new platform.
The group on Friday reported revenue of R41.2 million for the three months to June, compared with R63.9 million, in 2011. For the year to date to the end of the third quarter, it turned over R140.8 million, compared with R221.9 million last year.
The group reported a net loss of R1.2 million in the three months, which, accumulated, amounts to a R4.2 million loss for the first three quarters of the year. Last year, it made a R1 million profit for the third quarter, and a R7.6 million gain for the first nine months of the year.
TeleMasters has been migrating its clients away from least-cost routing (LCR) onto its own network as it says the LCR model does not make sense anymore. The group says its third-quarter results reflect management's continued expectations that 2012 will be a tough transitional year.
Its traditional LCR turnover decreased substantially compared with the previous period as it lost two large clients.
Steady progress
"We have chosen to move the manner in which we offer telecommunications solutions to clients," says TeleMasters. The group has developed a service offering that has built-in redundancy, which it says gives it an edge.
However, its challenge is to exceed the loss of revenue with the conversion of 600 long-standing LCR clients and the acquisition of new clients to its new Digital Direct service.
"The conversions on to the new platform remain slower than expected due to reliance on third-party fixed-line service providers interconnect implementation and delays with the porting of telephone numbers to TeleMasters."
In its results, the group says it has seen a large increase in billing of fixed-line airtime using its new technology in the third quarter compared with the first half of the year, showing its efforts are paying off. "We expect that this trend will begin to accelerate towards the end of the calendar year."
TeleMasters declared a third quarter dividend of 1c. Its share price closed at 75c on Friday, a 10c or 15.38% gain on the day.
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