NetActive incurs R3.6m loss

Internet services company NetActive has reported a loss of R3.6 million on continuing operations for the six months to 31 October 2001, and expects its losses to deepen in the succeeding six months.

CEO Lawrence Brick says that during the period the company completed the integration of its dial-up subscribers onto M-Web`s network.

The process called for more resources than expected, but Brick says it has enabled the company to focus on its target market - mid-tier enterprises.

Lower than expected growth rates resulted from "a difficult market, heightened competition in this market space and the additional focus required for the integration of the dial-up subscribers", Brick says.

A R3.04 million net loss (after interest income of R3.75 million) incorporates a loss of R3.28 million from discontinued operations, including Virtual Internet services (VISP) and NetFlorist.

A R2.6 million loss from VISP was largely due to the extra resources needed for the integration of the dial-up subscribers sold to M-Web.

Brick says the R3.58 million loss in continuing operations was mainly because of the contribution lost as a result of discontinuing VISP services.

"These losses are expected to increase over the next six months, until critical mass is achieved," he adds.

"The group`s overriding objective is to achieve critical mass, which will enable it to leverage economies of scale across its customer base."

He says the focus on providing Internet services to mid-tier enterprises is beginning to realise its potential, with the benefits of the investments made expected to be realised over the medium term.