"Small telcos could ring up big returns Author: Katrina...

"Small telcos could ring up big returns Author: Katrina Nicholas. Date: 28/02/2005 Source: AFR Publication: Australian Financial Review Section: Market Wrap Page: 15 There's a lot of potential in this fast-moving sector, writes Katrina Nicholas."

With a cash flow report due at the end of July and the yearly report to follow about a month later PEO hopefully will realise some of the potential mentioned.

The court case between Crazy Johns and Telstra resuming this month indicates a strained relationship. Given Brendan Flieter's shares in PEO Crazy Johns switching to using PEO has got to be on the cards in the future.

“Crazy John attacks Telstra
By Michael Sainsbury
17jun05

TELSTRA's mobile billing system, known as MICA, is fundamentally flawed and calculations of the commissions it pays its dealers are wrong, according to an affidavit presented to the Federal Court in Melbourne.

Telstra pays $500 million a year to dealers for signing up new subscribers and on so-called trailing revenues, a percentage of the bill for those customers.
The affidavit is part of the court battle between Telstra and its second biggest mobile phone dealer, Crazy John's.

The affidavit, presented yesterday, is from Crazy John's managing director, Brendan Flieter. It refers to a conversation he allegedly had with accounting firm William Buck, which is undertaking an audit of Telstra's billing and commission systems.

The firm is 18 months into an audit Telstra estimated would take four to six weeks, Mr Flieter's affidavit says.

Telstra is attempting to make Crazy John's pay back about $15 million it says are excess commissions.

Under its contract with Crazy John's, Telstra pre-pays monthly commissions. In dispute is a clause which caps the total annual commission payable to the dealer.

The broader legal dispute between the two centres on contractual issues and allegations Telstra's billing and commission systems are flawed, resulting in Crazy John's being underpaid by Telstra.

The court also heard extensive details of contract negotiations between Crazy John's executives and Telstra executive Ted Pretty.

Telstra consumer and marketing group managing director David Moffatt is attempting change all commission arrangements with dealers.

Separately, Telstra spokesman Warwick Ponder said: "The Telstra commissions payment system will process over half a billion dollars worth of dealer payments this financial year. Valid dealer queries account for only about 1 per cent of all payments. The vast majority of these queries are caused by incorrect data being entered into Telstra's systems -- human error.

"As we have always said, this case is ultimately about contractual interpretation and we are confident that our view is correct.

"The auditor has not issued a report (interim or otherwise) and therefore, at this stage, no conclusions can be drawn.

"The litigation is very much separate from our operational relationship."

Mr Flieter declined to comment.

The case was adjourned for further hearing in July.

© Queensland Newspapers”


On the negative side the court case against PEO is due to be heard in a few months. It would not be helping the share price but at least it will be resolved in the not too distant future.