TeleMasters' profit in the year to June has surged 10 times, as the company's Digital Direct platform gains more traction.
The listed company's bottom line moved from R257 080 in the previous period, which only comprised nine months as it moved its reporting period, to R2.7 million during the 12 months to June. Its profit margin also improved 7.5% as it converted older customers to its own network, Digital Direct, and increased sales through a bigger sales team.
CEO Mario Pretorius says TeleMasters has made a large capital investment in new technology over the past few years, and this investment has now begun to bear fruit. "The new platform not only allows us to provide better quality calls to our customers, but has also contributed to our improved margins."
The company's revenue also gained, from R98.7 million to R103.4 million, as it concentrates on boosting margins and not chasing low-profit revenue.
TeleMasters has been migrating its base to its Digital Direct offering, because least cost routing became unsustainable when the Independent Communications Authority of SA's (ICASA) first round of prescribed lower termination rates started to take effect in 2010.
The group also reversed its negative cash flow position, reporting R9.6 million in cash flow compared to a negative R7.6 million last year. Pretorius notes the company "saw a R17 million cash turnaround despite higher operating costs", which he says was due to proper cash and control of expenses. Operating costs moved up 35% during the period.
TeleMasters has also increased its sales team fourfold, says Pretorius. "We are converting clients and adding new clients to Digital Direct and expect that we will continue to improve our profit in the coming year. With the new system in place, the cost of generating additional growth will also be lower."
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