Webcentral Group has flagged a half-year revenue hit stemming from COVID-19 and poor customer experience issues, with the financial results coming as telco carrier 5G Networks finally completes its acquisition of the company.
The publicly listed digital services provider told shareholders that the poor customer experience issues revolved around three main areas, including support services via voice, chat and email, poor quality communication, slow responsiveness and repeated call backs.
The other two areas were console (customer platform) experience: outdated processes impacting the customer experience including billing and service provisioning; and technical stability, with network and cloud issues impacting customer experience which, in turn, has impacted the service.
Webcentral stressed it had undertaken a number of initiatives to address these issues.
“Management is confident that revenue growth will return across all four core services as these short-term issues are resolved,” it told shareholders.
Indeed, just days ago, the company revealed it had made a strategic decision to migrate direct customer support services, previously located overseas, back to Australia, as part of a broader plan to consolidate its operations in a bid to save costs.
The new Australian based support team will manage frontline support with second level and infrastructure support to be managed via the local customer support centre of 5G Networks, which had been steadily buying up shares of Webcentral Group after making an acquisition bid for the group last year.
The company's total revenue for the six months ending 31 December 2020 fell to $31.5 million, from the $36.9 million it racked up in the corresponding period the year prior.
However, earnings before interest, tax, depreciation and amortisation (EBITDA) moved in a more positive direction, from a loss of $76.5 million in the six months to the end of 2019, to a loss of $14.0 million in the half ending December 2020 – although it should be noted this was largely due to hefty non-recurring costs and impairment expenses in the prior year.
The company, previously known as Arq Group, sold off its enterprise services business of the same name in early 2020.
The latest financials come as the Australian Takeovers Panel delivers its final verdict on the latest application by activist shareholder Keybridge Capital in its ongoing efforts to prevent the acquisition from going through.
In the end, the Takeovers Panel declined to make a declaration on the matter.
Despite the persistent resistance by Keybridge Capital, 5G Networks’ managing director Joe Demase took over the temporary leadership of Webcentral Group in October last year, as managing director, amid the ongoing efforts to acquire the beleaguered IT services provider.
Now, with its takeover of Webcentral complete, 5G Networks, also listed on the Australian Securities Exchange (ASX), is gearing up to expand its already deep strategic business relationship with Webcentral Group.
Indeed, 5G Networks is now seeking to leverage Webcentral capacity for software code development for operational improvement and automation across its service delivery platforms.
“Importantly, the acquisition of [Webcentral] has enabled [5G Networks] to fast track its exposure to the SMB market and WCG’s 330,000 existing customers via its online sales portal,” 5G Networks told shareholders.
“Additionally, [5G Networks] will also develop a comparable e-commerce system as used in the [Webcentral] portal to deliver low touch, automated services to its wholesale clients.
“This most recent acquisition in particular sets the stage for the next phase of [5G Network’s] strategy for continuing its vertical integration across the industry. Future acquisitions will be funded from existing cash reserves, and we expect a large proportion of the [Webcentral] debt ($41 million) to be repaid over the next 12 months,” it added.
5G Networks also announced an expected “record” EBITDA range of $3.5 million to $3.8 million from revenue of $27.5 million to $28.5 million for the half year ended 31 December 2020, representing a strong EBITDA margin of 13 per cent.