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Growth strategy pays off for Vox

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Vox Telecom has reported a 231% jump in revenues to R869-million, a 313% rise in operating profit to R67-million and a 121% increase in earnings per share to 4.7 cents. These figures are according to unaudited results for the six months ended Febraury 2008. 

The group attributes its performance to strong organic growth in its voice and data businesses, combined with a successful acquisition strategy. Revenues for the interim period include three month’s contribution from ABSA Internet Access, Amvia and Telkom Ericsson (Namibia) as well as one month’s contribution from recent acquisition Storm Telecom.
“We’ve successfully combined earnings-enhancing acquisitions with excellent results from our existing core businesses,” says CEO Douglas Reed. “All our mature business units are showing strong organic growth, with the monthly contracted annuity base increasing to R170-million at the end of the period.” Reed says the integration of the various acquisitions has proceeded according to plan and the 2008 fiscal year will see a full 12-month contribution from prior acquisitions such as Orion Telecom.
“The second half of our fiscal year always shows greater growth than the first half because of the seasonal downturn over the December and early January holiday period. We are also starting to see strong performance in our Vox consumer offering and an increase in voice traffic in our corporate voice business."
Tony van Marken, executive chairman of Vox Telecom, adds: “Vox Telecom is now well established as the leading independent telecommunications provider in South Africa.
“We have established a strong foundation to grow our voice and data businesses across all market segments. We are completing the integration of our recent acquisitions and are seeing market share gains in voice and data. As evidence of our progress we now provide essential telecommunications services to over 18 000 corporate customers and 160 000 consumers.”
Vox Telecom has an established voice and data network and interconnects with all the major operators including Vodacom, MTN, Cell C, Telkom, Neotel and the leading VANS, and believes the South African market is poised for further growth in both the corporate and consumer segments.
“We have long been an established player in the data market, but we are now making our presence felt in the voice sector,” says Reed. “We see voice as a massive growth opportunity for Vox Telecom and believe our investment in this market segment is starting to pay off.”
Consulting company Frost & Sullivan says companies across Africa are increasingly looking to IP based services to reduce their ICT costs. This trend is providing growth opportunities for service providers such as Vox Telecoms.
“During the past 24 months, Vox has gone through an aggressive acquisition programme with the intention of diversifying its product range,” says Frost & Sullivan ICT industry analyst Lindsey Mc Donald. “This has maximised its opportunities to attract a broader range of clients, as the targeted acquisitions have resulted in a good variety of services with the ability to effectively support different market segments.”
Vox’s established presence in a number of different areas means that it is able to capitalise on growth in these markets, before the threat of new entrants becomes significant. For instance, the company operates both within both the consumer and corporate ISP space.
“The acquisition of focused expertise for various sectors is also of great importance as it means that Vox has acquired specific skills without having to experience the issues around recruitment,” Mc Donald adds.
Frost & Sullivan does, however, warn that increased competition in the telecommunications sector poses a threat to market incumbents, such as Vox. The company will have to keep its product offerings appealing to compete with new entrants offering innovative value propositions.
“The introduction of undersea cables to the market and the anticipated lowering in tariffs will create an even greater window of opportunity,” Mc Donald says. “Vox will have to ensure that it keeps its tariffs and product portfolio attractive to consumers who are becoming increasingly cost sensitive.”