The commercial and consumer business segment for Sify has shrunk even further for the company, down to $1.95 million, compared to $2.78 million for the same fiscal last year – a year on year decline of 29.85%. In addition, the contribution of this segment to total revenues is down to 5.2% (of $37.10 million), compared to 7.92% for the same quarter a year ago. The lack of relevance of the consumer business for Sify is such that it barely gets a mention in its earnings release – only “Visitors to our Sify.com portal grew by 19% versus same quarter last year, helped by the launch of Health and Technology portals and the strength of Sify Sports.” There is no mention of its access business and e-ports. For information on the enterprise business, go here.
From Sify’s Annual report, we’ve culled out the following information, though it pertains to the financial year ending March 2011, and is hence six months older than the current results:
Revenue from Consumer One services comprising of Internet Access services and Online Portal services, has decreased by Rs 31.84 crore or 37.69 % from Rs 84.47 crore for the year ended March 31, 2010 to Rs 52.63 crore for the year ended March 31, 2011. The reasons for the decline:
– Internet Access services: accounted for Rs 40.39 crore in revenues, down from Rs 71.39 crore, representing a decrease of Rs 31 crore, or 43.42%. This was on account of a decrease of Rs 17.8 crore in broadband services revenue due to decrease in subscribers of the high speed Internet access to homes by 28% during the year, from 106,000 as of March 31, 2010 to 77,000 as of March 31, 2011.
The cost of goods sold and services rendered by Sify’s Internet Access services decreased to Rs 35.89 crore for the year from Rs 56.91, representing a decrease of Rs 21 crore or 36.93 %. The decrease is on account of (i) Rs 12.15 crore decrease in the cost of revenue share paid to CTOs and franchisees due to reduction in volume of business, (ii) Rs.67.29 million ($1.51 million) in the bandwidth costs due to usage and price reduction and (iii) Rs.26.15 million ($0.58 million) on account of appropriate sizing in technology man power.
– Cybercafe revenue: declined by Rs 11.65 crore due to closure of active cybercafés caused by unexpected rent increases in the recent years incurred by the franchisees for cybercafe premises. Sify’s cybercafe model is operated in both a B2B2C model, where the cybercafe buys connectivity from Sify and offers the same to the end customer. As of March 31, 2011, it had 1,860 operational e-ports (formerly iways) in 226 towns and cities. The franchisee procures the retail space, invests in furniture, interior decor, personal computers, point of sale signage and employs/trains the staff. Sify provides the back-end support, including bandwidth, the authentication/usage engine and the billing/collection system, and can control the prices being charged to the customers. The e-ports have about seven personal computers and operate in an area of about 250 square feet.
All e-ports operate on a prepaid subscription model, and the end customer has the ability to browse from any of the e-ports using the roaming facility that we provide. Interestingly, “more than 99% of these cafés are connected through the wireless mode, on the 5.7 GHz or the 2.4 GHz spectrum, with a subscriber unit placed on the top of the building and connected to an access point in a tower that is within a 5 kilometre radius from this location.”
– Voice revenue:decrease of Rs 1.80 crore due to price reductions offered to customers to retain the existing customers and/or attract new customers to combat competition. As of March 31, 2011, more than 500 of the e-ports had the capability to provide VoIP. We provide these services through standalone VoIP booths at various strategic locations in major cities. We use MPLS enabled technology that ensures voice clarity.
– Other Internet access services: reported a decrease of Rs 34.2 lakh from other Internet Access services.
– Online portal and content offerings division accounted for Rs 12.27 crore million of revenues for the year ended March 31, 2011, as compared to Rs 13.08 crore for the year ended March 31, 2010, representing a decrease of Rs 83.7 lakh, or 6.40%. This decrease was on account of (i) a drop by Rs 1.58 crore caused by a decline in Travels services.
The above decrease is partially offset by increase of Rs 75.1 lakh in revenues from advertisement.
The cost of goods sold and services rendered the portal business decreased by Rs 36.4 lakh from Rs 5.26 crore for the year ended March 31, 2010 to Rs 4.90 crore for the year ended March 31, 2011, 7% down, due to a decrease of (i) Rs 1.21 crore in bandwidth costs, Rs 22 lakh on account of reduction in content costs. The above decrease is partially offset by an increase of Rs 85 lakh in the Manpower cost.