Andrew and Richard Branson founded IF Telecom to cater for what they believed was a distinct lack of services for SMEs. Now the company is turning over $5 million, growing at 50% each year and rapidly expanding its customer base.
But like many telcos, IF Telecom is preparing for the NBN. One way it is doing that is through acquisitions – last month it bought Always Online, and before that Vocall Pacific, Paragon Telecom and Deal Telecom as well.
Andrew Branson says it is critical that telcos start growing their user bases in order to successfully cross over to the NBN.
How’s IF Telecom been going?
Since the Smart50 last year it’s been going great for us. We’ve increased our staff count, increased customer numbers, and we’ve had strong revenue growth. It’s all looking very positive.
What sort of revenue are you looking at?
For the financial year that’s just about to end, we’re looking at just south of $5 million. For our target for the next financial year we want to push $7 million, which we think will be easily achievable with these acquisitions.
When did you start thinking about how you would prepare for the NBN?
We probably started really thinking about all this as soon as Labor won the election, and until then it was up in the air a little. For us there are still a lot of unknowns – for everyone else as well – and we just want to get as many DSL connections as possible. And we want to focus on the SME sector at the same time as well, and have as much growth in that area as possible.
Why such aggressive growth?
We want to grow aggressively as that will allow us to negotiate harder with wholesalers.
We see the customers we have now, and we’re trying to create a relationship with them, get them to understand the benefits of being an IF member. From our point of view we have very low churn, and the more we can get now, the better.
Why acquisitions? How will they help you prepare?
Having more members on board allows you to benefit from economy of scale, and gives bargaining power with the wholesalers. We can’t see ourselves directly connecting to the NBN just because of our size, and because of the costs. But it gives us a closer position to ensure we can provide the same services and get a good deal.
Why are these acquisitions so useful?
The two acquisitions we’ve done recently are on a DSL basis, and they’ve been around since the start of DSL and still even have some legacy dial-up customers. We’ve found that for many of these customers we’re able to give them faster and better internet and keep their costs the same, so we think we can add value to these guys.
They’re a profitable transaction for us, and of course there’s a huge cross-sell opportunity. Because we’re a full service telco provider there are opportunities to look into telephony and mobile as well.
What will be the biggest challenges in integrating these companies?
I think there will always be a challenge to make sure we have enough member support, and make sure those levels are high enough. We guarantee to answer the phone in 10 seconds during opening hours, and that’s a core focus. And with aggressive growth plans, even before the NBN came along, we’ve had to put members and customers on and need to invest into support lines as well. That will be a challenge going forward.
How are you working out the transfer to the NBN?
One of the bigger things we’re working on, and we think there is going to be a lot of confusion about this in the years ahead, is that what does a business do with regard to the NBN? Of course larger companies understand this very well, and so they’re responding to that. But we’re trying to mobilise our sales force, get into businesses and really explain how the NBN works. And hopefully we’ll get some customers that way as well.
Our approach is very much face to face. We’re going to visit as many of these businesses as humanely possible. We think they appreciate the personal aspect to it.
What other plans do you have?
We’re going to grow aggressively. We’ve got a couple of other service providers, and now we’re getting approached by smaller ISPs that know there are going to be too many market barriers for them under the NBN. We’re keen to talk to them.
That’s a big part of our growth strategy, and on top of that is our organic growth as well.
How will you see your role in selling the NBN to these customers?
I think we really have to become an educator. There are a lot of small businesses that really don’t know how to use the technology available to them. And I think with the NBN it’s our job to teach businesses how they can do that, and that’s how we can grow.
What other challenges are you going to have to face?
We don’t have unlimited funds. We’re privately owned and every transaction we do has to make sense. We’re trying to grow fast but we can’t just put on 100 extra sales staff. And the service has to be impeccable as well, so we can’t let that drop.
People can see the growth here, and they take enjoyment from that. We have to makes sure that level is sustained as we grow.
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