Wireless operator Clever Communications turns around

Stuart Corner
Friday, 22 August 2008 12:18

IT Industry - Strategy

Broadband wireless network operator, Clever Communications (ASX: CVA) has achieved a net profit of $284,000 for the half year to 30 June 2008, an impressive turnaround from the parlous state it was in at the end of FY 2007.

For the full year to 30 June the company reported EBITDA of $1.065m and net loss after tax of $3.5m. Revenue was down to $17.2m from $18.2m in the previous year. Managing director, Scott Carter said: "Following the restructure in the first half of the year the business now has tight cost controls in place and is focussed on high margin on net data sales. This has resulted in a significant turn around in the performance of the business in the second half of the year."

The result comes just a year after Carter took on the MD role and implemented a major restructuring of the then ailing company. According to chairman David Williams, Carter "found a company fat with costs, in breach of banking covenants, and on notice to lose significant custom through service complaints."

Williams told the AGM in November 2007 that "Clever Communications...has not lived up to its potential. Shareholder value has been eroded and the company's shares have been trading below where we would all want them. In the 2007 financial year a net loss of $305,000 was recorded and that followed the 2006 loss of $587,000."

Carter said that in his first three months in the job he had reduced headcount by over 15 percent (the figure is now 30 percent) streamlined the executive team and removed duplication within the sales and marketing functions and renegotiated more favourable supply agreements to improve margins. "We have recruited high calibre, proven executives to head finance, sales and customer service functions. And we have a clear goal. To be Australia's premier business grade wireless ethernet carrier."

Clever claims to be Australia's largest wireless broadband, business grade network operator. It claims to be able to deliver 10Mbps services in Sydney, Melbourne, Brisbane and Adelaide and to be able to connect customers within 48 hours.

During the year the company lifted the number of customers on its own wireless network 180 percent and on-net data revenue grew 106 percent. It has been busy recruiting new channel partners during the year and now has more than 100 targeting business, education and the health sectors.

Having just this week acquired the business and assets of Dedach Pty Ltd, a specialist provider of business Internet and data network services which trades as NPH, the company is on the lookout for more acquisitions saying it sees "significant opportunities for consolidation within the industry" and believes that, as a network owner and operator "Clever is well positioned to capitalise on these opportunities."

Carter said that the NPH acquistion would "provide Clever with additional scale translating into improved margins across the entire business along with the opportunity to offer the NPH customer base a full range of business grade data and voice telecommunications services on a single bill."