Press Review >>> April 2000




Andhra ISP posts profits in first year of Operations - Business Standard - April 26, 2000
BUSINESS STANDARD (April 26, 2000)

Southern Online Services, the first private sector Internet service provider (ISP) in Andhra Pradesh has posted profits in its very first year of operations.A category 'B' Internet service provider, it commenced operations in May 1999 and got 3,800 dial-up and 13 leased line subscribers by the end of the financial year.The company has made a pre-tax profit of Rs 60 lakh, on an income of Rs 2.02 crore, after providing Rs 31.71 lakh for depreciation and Rs 20.27 lakh for interest. At present, the company provides Internet services through the Videsh Sanchar Nigam Ltd gateway. However, the company has now obtained permission to set up its own gateway.The company, which already provides services in Hyderabad and five other places, is existing its service to six more centres in the state. In all these places, the company expects to improve its profitability by providing services to corporate subscribers who want greater bandwidth. The company plans to increase its subscriber base to 10,000 by the end of the fiscal and by 25 percent per annum thereafter. While a gateway with a capacity of 8 MBPS will cost Rs 3.61 crore, the company expects to spend about Rs 1.34 crore on ISP equipment. An expense of Rs 57.30 lakh has been estimated for e-commerce and software development. The company is making a public issue to raise Rs 1.34 crore to partially finance the project, the total cost of which is estimated at Rs 5.97 crore. According to the promoters, this will be the first initial public offer from an Internet service provider. The issue is opening on May 5. A profit margin of about 80 percent is estimated on the project, which was appraised by the Reserve Bank of India in January. Of a Rs 8.9 crore income, that consists of Rs 7 crore from ISP services and the rest predominantly from web-hosting services, the company is expected to make a net profit of Rs 7.77 in the current fiscal. The earnings per share in the second and third year are projected at Rs 8.86 and Rs 11.91, respectively.