Vonex surges 10% as strong growth continues across its businesses

Shares in telecommunications innovator Vonex Limited (ASX:VN8) were up 10% at lunchtime after the company provided an extremely positive update in relation to the company’s operational progress across its wholesale, retail and development arms.

Of particular note was the successful integration of the new 2SG wholesale business and expansion of the company’s established, but fast-growing retail operations.

Importantly, the company has also made good progress on the innovation front with the Oper8tor app.

Management said that it has now finalised financial integration of 2SG Wholesale, the telecommunications and data wholesaling business.

2SG Wholesale has brought a new dimension to the company’s business and has allowed Vonex to expand its offering to small and medium enterprise (SME) customers with new products.

These new products include fleet mobile (which is available now), and mobile broadband and NBN with 4G backup available from July 1, 2020.

Activation of new NBN direct points of interconnection

In May, Vonex activated the first of several planned new NBN direct points of interconnect (POIs), and management plans to further improve its network quality by activating additional direct POIs with the NBN in the September quarter.

The company’s smooth integration of 2SG Wholesale has been accompanied by growth in new customers and order value.

Vonex has added five new wholesale customers since the beginning of May, and the company has also achieved an increase of 75% in mobile broadband orders in the June quarter compared with the same period in fiscal 2019.

This promising growth reflects the cross-selling opportunities which Vonex identified prior to acquiring 2SG Wholesale.

Management has identified further opportunities to materially improve its service delivery through 2SG Wholesale.

With upgrades to provisioning systems scheduled for completion in the September quarter, management expects to achieve more than an 80% reduction in the average total time taken to facilitate new service activations, decreasing from 36 minutes to 6 minutes.

Vonex has also scoped and commenced its plans to integrate 2SG Wholesale’s billing with the company’s existing platform, with completion expected in the December quarter.

The cost synergies which the company has identified through these measures, as well as supplier and network rationalisation, are expected to deliver meaningful operational cost reductions and efficiencies.

Vonex continues track record of total contract value growth

Vonex’s retail operations continue to expand with new customer additions continuing to run at elevated levels through the depths of the COVID-19 crisis.

The company achieved Total Contract Value (TCV) of new customer sales in the 5 months from January to May 2020 of $3 million, an increase of 60% on the prior comparable period, with growth accelerating in April and May.

From early July, Vonex will expand on the Qantas Business Rewards offering, adding mobile plans to the suite of services on which Qantas Points can be earned, with a view to gaining market share with Australian SME (small to medium enterprises) customers.

In terms of product development, Vonex has continued to deliver improvements and expansions to Oper8tor’s functionality since v1.1 of the Oper8tor app was made available in May 2020 via the Apple and Google app stores.

Following valuable feedback from early users, the company has advanced the app to version 1.5, with a greatly improved user experience which aligns with the newly revamped Oper8tor website.

While Vonex continues to pursue its strategy to roll out the Oper8tor app through a consumer value proposition, management has identified attractive additional commercial applications and has focused its recent product development to address this potential market.

Launch of artificial intelligence-driven call recording

Vonex has recently developed and launched artificial intelligence-driven call recording within Oper8tor, providing a highly-requested feature among enterprise and SME customers.

The company has complemented this feature with its recent launch of real-time call transcription, with accuracy continually improving and email transcriptions delivered to users within seconds of a call ending.

These features, along with the inclusion of conference, voice, message and video functionality across multiple communications platforms and devices, will underpin a focused business-to-business (B2B) growth strategy for Oper8tor which facilitates growth in users and recurring revenue through a software as a service (SaaS) model with cross-platform calling for the mobile worker as its key value proposition.

Vonex has developed a marketing plan and product roadmap which aligns with this vision, and in conjunction with Ragnar Capital Partners LLP in London, management is actively engaging with potential strategic partners who can help Oper8tor to expeditiously execute these goals.

Management has invited investors and other interested parties who are willing to provide feedback on Oper8tor’s development to participate in its current testing phase by downloading Oper8tor from the app store of their choice.