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Broad Investments cuts back VoIP ambitions

After launching and boasting about big ambitions for its VoIP subsidiary, BroadIP, Broad Investments (ASX: BRO) has announced plans to cut back on its telephony business and focus instead on its mobile content and mobile application subsidiaries.

In an announcement to the ASX on 8 September the company said "The Board of BRO wishes to advise that recent review of its businesses and opportunities available to BRO indicates that the MTX (pocket portal and mobile applications) and Glovebox (Mobile Content) divisions offer the greatest prospect for faster growth and early cash flow generation...As foreshadowed in the recent price query response to the market, the board would take prudent steps towards a more efficient allocation of resources and reduce cash burn, by changing its business plan and strategy by focusing on activities that would provide the best opportunity for increased cash flow and scaling down under-performing operations.

"The Board has therefore agreed that henceforth it will focus its resources more into MTX and Glovebox, and reduce its direct activities in the more competitive telephony (voice and data) market through outsourcing and other strategies, including discontinuing services that absorb excessive cash."

Broad Investments launched a new subsidiary, BroadIP offering aVoIP service for the residential and corporate market in April saying it aimed to lead the residential VoIP market by revenue and customer numbers and to be "a significant player" in the large corporate market.

Broad Investment's chairman, Vaz Hovanessian, told iTWire at the time: "We have a very aggressive marketing programme. We are talking to large owners of property: apartment blocks hotels etc, where they are installing one service but two, three or four hundred services at a time....The model we have is going to be profitable very quickly. We won't necessarily be paying anything for the cabling: the funding will be raised in a different way, it's part of the unique offering we have."

By the end of April the company made out that things were going well. It said that rapid growth since its launch less than a month earlier had forced it to expand its operations. It claimed to be on target to sign more than 50 resellers, saying they had approached it. The company said it was on track to have more than 200 resellers by 1 July.

At the beginning of June more optimistic projections were forthcoming. The company claimed that staff numbers had increased from seven at launch to more than 20 and that, in order to focus its sales efforts on the more profitable SME and corporate sectors, it had engaged a specialist call-centre in Melbourne to provide telesales and help desk services. It attributed much of the growth to its arrangement, announced in May, to resell its VoIP service through National Telecoms Group (NTG) and its affiliated channel partners.

From a value of around one cent in March before the company started spruiking its VoIP ambitions the share price had increased five fold by late April but has been steadily falling since, to about 2 cents at the end of August when it plunged to its current value of around half a cent.

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