Announcing its interim results for the six months to the end of February 2010, Vox attributed a 1% drop in group revenues to a strategic decision to delay renewing SIM cards in its Vox Orion division until new mobile termination rates became effective. As a result, revenue from connection incentive bonuses (CIB) dropped from R37.7m in the comparable period last year to R3.4m this year.
Group CEO Tony van Marken said Vox was not unduly concerned by the revenue dip. “Our cash generation is good and we’ve further paid down our debt, ending the half year with cash on hand of R106 million.” The group’s gross profit remained unchanged at R235 million, off total revenues of R1 044 billion despite the difficult economic environment and deflationary pricing in the voice and data market.
Group profit margins increased slightly to 22.5%, which Van Marken described as “encouraging” despite the loss of CIB revenue. “We’ve continued to control our operating costs very carefully, and we’ve seen excellent uptake of new products like the Fishbone line bonder and our Eyeris videoconferencing solution, as well as improved usage,” he said.
The group’s wholesale voice and data businesses have continued to grow, with Vox Datapro in particular posting an 18.91% increase in revenues. Van Marken said the group would continue to introduce new products through 2010.
At the same time, Van Marken said Vox was taking advantage of new call termination rates and the advent of full local number portability to speed up the migration of important customers to its all-in-one Cristal Vox voice and data solution.
“Full local number portability is a critical element of market liberalisation that finally gives customers the opportunity to use an alternative provider to Telkom without changing their numbers,” says Van Marken. “This is a real game changer in the South African telecoms environment.” “Once local number portability comes into effect on April 26, we expect to see increased uptake of our Cristal Vox offering, positioning the group for stronger revenue growth in the future.”
Van Marken also welcomed the new interconnect regime announced by ICASA earlier this month, with substantially reduced termination rates for both fixed and mobile calls. “We’re now able to offer our customers much more competitive rates for their outbound voice traffic,” says Van Marken. “Things are finally coming together for South Africans to enjoy a genuinely competitive telecommunications market for the first time. A couple of key pieces are still missing – notably carrier preselect and local loop unbundling – but we are continuing to lobby hard for those.”
