In this article you see how management finally admits that they...

In this article you see how management finally admits that they were chasing growth at the full expense of profit. Something they would not tell us out and out before time.

long term sufferers will be turning to the new CEO for hope that this policy will change.


Company: People Telecom

Founders: Ryan O'Hare and Colin Marland

Growth: 322.8%

Growth tip: If you focus on your staff then everything else will follow.Many companies in the telecommunications industry have had a tough year, particularly as Telstra has changed its attitude toward its resellers. People Telecom, an Australian Stock Exchange-listed telecommunications reseller, makes the BRW Fast 100 following fast revenue growth over the past three years but it is a company under pressure as its share price falls and profits evaporate.

Ryan O'Hare, who launched People Telecom in 2000 with Colin Marland and the support of two Crazy John's executives, Barry Hamilton and Brendan Fleiter, says the company is looking forward to its next phase of growth following the appointment of an external chief executive to replace himself.

People Telecom was founded in 2000 to be a full-service telco. It attracted support from the listed data communications company Uecomm, John Fairfax Holdings (owner of BRW), Fairfax chairman Ron Walker, the Lowy family and Qantas chair Margaret Jackson. But by August 2002, O'Hare and Marland had bought out those investors.

A market downturn led the company to become a business-to-business specialist. It now has agreements with Telstra and Optus, as well as its own network. Under the new model, the company went public by merging with listed telecommunications company Swiftel in July 2004.

The chief executive of telecommunications company Soul, Michael Simmons, paints a grim picture of the climate for resellers. "They are really struggling. Telstra's conduct has changed since the arrival of its American executives. They have said quite publicly that they don't believe in wholesale and resellers are getting screwed."

O'Hare says margins have declined in the past year but he doesn't blame Telstra's policy. People Telecom signed a generous agreement with Telstra in June, and O'Hare says the company chose to spend $7 million on customer acquisition during that time to maintain its revenues at above $100 million rather than chase profit.

The company made a loss of about $300,000 on revenue of $110 million in 2005-06 (not including a large writedown of goodwill in the transition to the new international financial reporting standards).

In February, O'Hare decided not to renew the two-year employment contract he signed to act as chief executive when the company listed. He realised it was time to hand over to a person who was experienced in taking companies through the next phase of growth. The board appointed John Stanton, a former executive at Telstra and satellite operator Intelsat.

When it came to handing over management responsibility in August, O'Hare says he found it remarkably easy. "It wasn't hard because I think we have the right person to do the job," he says. "It has been one of the easiest things to do and people thought I couldn't do it."

Stanton is reviewing the company's strategy and the market is eagerly awaiting his new plan to trigger profit growth. O'Hare remains a non-executive director of People Telecom and will advise the company on possible mergers and acquisitions.

However, the adrenaline created by starting up a business is the thing that keeps O'Hare motivated so it is not surprising that he is already looking for his next new venture.