I hope you're correct (in the short term). It will be very interesting to see if they have maintained revenue growth for the current quarter. It appears as though download levels have been consistent during a traditionally quiet period, but with a lot of heavy pre-xmas bargains being offered late last year, I believe many purchases may have been brought forward, and I'm a tad skeptical as to whether they will even maintain the revenue obtained last Q. (A seasonal reduction in revenue occurred this time last year).
If FRX can achieve ~$1.2m in consumer revenue they will be very close to CFP (any corporate revenue, just gravy). If they hit or exceed this level, with $1.5m in cash and such a tightly held register, lookout!
I agree the advent of eSIM does create both opportunities and threats for FRX, and that they too will have to jump on the bandwagon eventually, but at this point I believe that the new Apple watch & iPad3 are the only devices in our 1st world telco environment here in Australia that support eSIM? I endorse FRX's focus on ensuring they capitalise on the billions of potential customers the existing offering can satisfy to ensure the businesses' cash flow is self sustaining.
Once achieved, (hopefully already) I'm happy for them to differentiate their offerings to create sustained competitive advantage going forward. That said, I've been pleased recently that they are already innovating on other fronts with:
1. Inflight WiFi (via Scoot) - commenced March 1
2. Free* WhatsApp Chat SIM (pun intended) - commenced March 15
It is too early to say how successful these initiatives will be, however early signs are encouraging. Downloads appear to have increased in Singapore (Scoot) & less than a week in, the WhatsApp product (X2) seems to have had a significant impact on download numbers, noting that they achieved 3 top 500 ranks in China since the launch of the promo. (China's appstore's are apparently now larger than the USA).
In addition to future innovation, I believe FRX are structured well to compete.
They are possibly one of the lowest cost producers in their sector. 50+ staff on that wage bill, very impressive! In the absence of them successfully innovating, this should be enough to ensure survival in 'a race to the bottom'. TPG are another company I view in this mould, very disciplined and just keep delivering the numbers.
FRX have grown their wholesale channel to over 150 partners in less than a year! This channel contributes to a lower cost of customer acquisition and ensures that someone has a vested interest in ensuring that the glue and fiddling make things stick. 29 airport stores and counting, with only 1 staffed by FRX. These resellers have already purchased 50k microchips that have not yet been activated. The revenue numbers for FRX last quarter were based on ~35k subscribers!
The other aspect to consider is that their customer base is geographically diverse, spread far and wide, across many countries. If a particular country or region (EU) decides to reduce roaming charges, then life goes on. They are well insulated against the issues currently being faced by other single region discount MVNO's, such as AYS.
Finally, you can receive a call whilst on X, you just need an OTT VoIP app! FRX used to have one (it even did video), but they realised they couldn't make any money in that game and they discontinued it! I do believe there are some awesome ones out there in the market, and all would work equally well with X.
FRX Price at posting:
9.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
