May Telkom burn!

[tec0]

Interesting. However you cannot ignore the fact that we have only one service provider “Telkom”

and everyone else is just dealing trough Telkom. Fact is Telkom is cost effective but you would be surprised that TELKOM still doesn’t offer DSL in my aria. We are still stuck with 56k dial up and downloading your mail from that will up your stress and end up killing you...

If you want to send your family a Video clip or even use Skype on 56k I am sorry but you are dead in the water. Vodacom works OK most of the time but even with a tower being so close I can read the no-entry signs on it; it doesn’t help with my speed.... “Rather doesn’t help with my speed anymore” it use to be good.

In all honesty it is still cheaper to have DHL deliver a HDD then sending info via the net. In short you don’t get your money’s worth.

case and point with TELKOM: http://www.telkom.co.za/products_ser..._dsl_cost.html

[jinxster]

Hey im not here to fight, I didnt mean you were wrong SoftDux, I actually agreed with you on speed issues just added something for other people.

With regard to your advertising spam, you guys brought up Afrihost @ R29 first.

Then I hear your comments about advertising markets and budgets, but er...

Have you ever thought to yourself... sometimes it is too good to be true... what is the scam.. is there a scam.

I am in no way insinuating a scam. However, when it comes to a company t/a another company name.........

Most large tenders automatically disqualify you. Let me try and explain without making anyone mad or being sued...

Lets call it.. mytaxname t/a myadvertisedcompany

mytaxname is what all my tax submissions get sent on... when I sell something I tell my customers myadvertisedname. This is perfectly fine however the trading part is the part that collects the VAT, so your VAT registration must have that name registered somewhere in it... go check out afrihost (wont mention their other company name) and it seems like there are 2 VAT numbers for the first bit and 0 for the second... hmmm so which is it...

The art of creating confusion to delay time...

Second... how long has this advertising budget been in play? it clearly states.. a limited number... seems like a very large limited number to me hey.. wonder how much money they got available in advertsing alone....

Now I am not saying Afrihost is scamming in any way. Im just going to tell you how you get some capital.

Basically... there is a ficticious number in companies called... Goodwill.

It is an asset, just like having a car / building / equipment / etc. However it is an intangible asset that cottons on to the market edge the company name has. (whats in a name). If you have a good name you can say.. i have an intangible asset of R1m... R2m, R200m. It happens. However if the company closed it doors and never traded again it would be sold @ R0. So, why make this asset, accounting people will tell you.. when you sell he company... great thats cool, why would you have one in your balance sheet when the company isnt being valued? Well, it beefs up your surety power at the bank and hence you get nice beeeeeg loan. R200m Goodwill = R150m overdraft facility for most banks, its an overdraft, not a long term loan. Overdraft for advertising... sorry that slipped out

The major price decreases started end of Dec 2009 mostly.. why was Afrihost sooo much cheaper sooo much earlier and they never tendered for any government contracts? Co incidence? When did the SEACOM cable get finished?

They get better rates... maybe... maybe not.. just saying its easy to make liquidity if you make intangible assets....

Technically if Afrihost have their real trading name on the invoice, you got yourself a valid VAT invoice. I havent seen any invoice from Afrihost ever, so I have no comment on if they are true or not just pointing out minor details that create millions.

Check SARS VAT vendor search, I dont find Afrihost or Afrihost Internet Services. Maybe I spelt it wrong...

[Dave A]

I see a snag. As far as I know, you can't add goodwill to a balance sheet without a sale

[jinxster]

Hence you make more and more sales by selling at half price....

[IanF]

Technically if Afrihost have their real trading name on the invoice, you got yourself a valid VAT invoice. I havent seen any invoice from Afrihost ever, so I have no comment on if they are true or not just pointing out minor details that create millions.

Check SARS VAT vendor search, I dont find Afrihost or Afrihost Internet Services. Maybe I spelt it wrong...

Jinxster
I checked the Afrihost invoice and their VAT number is registered.
So I am happy that I have a valid Tax invoice.

One thing they have to guard against is jumping to the wrong conclusions without all the facts. Afrihost have said they get their Internet from IS so they must get a better deal than you hence can sell it cheaper. Anyway they seem quite open and are quite active on MY Broadband, If you search there you will get a lot more info.

[Dave A]

Need to get more specific.

You can't add goodwill to a balance sheet without a sale of the business from one owner to another.

[jinxster]

Need to get more specific.

You can't add goodwill to a balance sheet without a sale of the business from one owner to another.

You shouldn't add goodwill to a balance sheet without a planning sale of the business.

In practice though it is done many times when a company hits a cash slump then later on you battle and battle to get rid of it until you sell the company then the existing goodwill gets credited and your capital gets debited so the company owes the seller less money. All he can do is hope the new owner pays him the same goodwill so that he breaks even, otherwise he is no better off selling the company, hence if put him in the wrong vicious circle.

Its basically a way to keep a company in operation over the long term in spite of immediate cash flow problems.

My advice, if you want a goodwill asset, it is a good indicator if your business is growing or not, but then add in either a general reserve or an asset replacement reserve to aid in reducing future expenses, coz when you sell.. the debits and credits cancel each other out and you capital figure you were always looking at doesnt change drastically.

If you write software your whole business is creating industry norm techniques to give you the edge.

Eg: you need an accounting package... so I write you one.. it takes me 3 years @ R 0 because I did it myself in my spare time. The goodwill asset cost me nothing, but if someone else wants it, he must either pay someone who can do the job for 3 years (eg 36 months @ R15000 = R 480 000) (or hire 3 people over 1 year) so that means if I sell my company, I can get R450 000 and the other oke gets a bargain.

If I want cash now though, I tell the bank I have this intangible asset of R450 000 and they basically give me 75% of it as a funding scheme so I can sell it to customers in the mean time for a monthly license which is much less than a customer paying me R450 000. But if I dont need the cash now, I dont bother with saying it is worth anything unless I want to sell the business.

That said, software isn't truely speaking goodwill though, but is the same concept. Goodwill is usually calculated from past financials to see how easy the profits came.

[jinxster]

Jinxster
I checked the Afrihost invoice and their VAT number is registered.
So I am happy that I have a valid Tax invoice.

One thing they have to guard against is jumping to the wrong conclusions without all the facts. Afrihost have said they get their Internet from IS so they must get a better deal than you hence can sell it cheaper. Anyway they seem quite open and are quite active on MY Broadband, If you search there you will get a lot more info.

Good on them then!

IS dont change their prices between customers (cept on tenders), customers buy bigger packages then aggregate services. Same as a retailer, you buy a million coke cans you will pay less per coke and hence you can be cheaper. But 6 months ago cheaper prices werent anywhere near R29/gb.

It could also be Afrihost thought why not take a hit now (ie sell at a loss) then when the prices come down they will have lots of customers. The only downside to that is, in ISP people like to keep their emails which locks them in to a provider, if they dont have that problem they move... but then its easy come... easy go. Someone else may say R25 then you lose all your good clients.

TBH I dont compete in the ISP price wars, Im not even registered on ISPA. I sell software which uses bandwidth and those clients I supply bandwidth to make life easier. I posted my selling price at the same time as posting my suppliers name, and you can go and buy from that supplier for less than me. Does that not say something? Im not out to steal your ISP customers, Im here to make specialise products work better. If you asked to VPN 4 sites on Afrihost, would they be able to help you at no additional cost? Telkom charge R700 odd pm for up to 20, what if you more than 20.. oops. IS charge er.. well significantly more. (ps: that 4 site VPN must include no configuration or hardware at the clients premises)

However end of the day, your just covering your own needs. If you compare simple services for what you need, its the same thing end of the day. Afrihost is fine, just still looks shady... I am curious to know which VAT number did they use?

[SilverNodashi]

Their VAT number is 4950211534.

And they are a big company, don't let their website or prices fool you into thinking they're small. They also clearly state on their website why their prices are so low, found here: http://www.afrihost.com/adsl-faqs.php

Just a quick secret: I've been paying IS ADSL R50/GB for the past 3years, and we don't have large volume discount. Someone else I know has been paying R40/GB. Yet, the average market price was R70, so everyone made a good profit from it. Is it theft? No, the supplier(s) advertised their prices, and the customers accepted it. But with the arrival of NeoTel, Seacom, "open ISP licences", etc the demand for cheaper prices got a bit out of hand. Afrihost decided to cut their own throat, so to speak, and offer this services at, or below, their cost price. They didn't make any profit from it, but they gained a very large amount of clients. Other's like Axxess, Screamer, etc soon joined in, cause they probably lost clients & market share

I can tell you, from experience, that Afrihost makes enough money on their other products & services to afford this kind of move. Other companies, on the other hand, may not do as good as they do with this kind of offering.



P.S. Generally self promoting (to the extend of saying "I offer product ABC @ R100, sign up here") is generally seen as spam on forums

[Dave A]

If you write software your whole business is creating industry norm techniques to give you the edge.

Eg: you need an accounting package... so I write you one.. it takes me 3 years @ R 0 because I did it myself in my spare time. The goodwill asset cost me nothing, but if someone else wants it, he must either pay someone who can do the job for 3 years (eg 36 months @ R15000 = R 480 000) (or hire 3 people over 1 year) so that means if I sell my company, I can get R450 000 and the other oke gets a bargain.

If I want cash now though, I tell the bank I have this intangible asset of R450 000 and they basically give me 75% of it as a funding scheme so I can sell it to customers in the mean time for a monthly license which is much less than a customer paying me R450 000.

OK. I follow what you're getting at now.

This should be done via a valuation process. You'll revalue your assets and post against a revaluation reserve. This way it would comply with GAAP and not mislead as to where the value came from.