Higher investment dents Zen’s profits

ROCHDALE-based internet service provider (ISP) Zen Internet saw its pre-tax profits drop by around a third to £591,000 in the year to September 30, 2010 despite increasing turnover by 6% to £40.4m.

The company, which is owned by entrepreneur Richard Tang, said that the decline in profits was due to increased investment in its IT network.

A directors’ report accompanying the accounts said that the firm has been “investing further into our internet backbone network for our core products, combined with a migration to an enhanced broadband product set”.

The company was started by Mr Tang in 1995 and is based at Sandbrook Park in Rochdale. It said that the turnover increase was the result of an enhanced product offer and through the growth of its customer base.

“The directors believe that this growth will continue and, combined with additional new products, will provide further increased turnover and profitability”.

Zen Internet has launched a series of new initiatives over the past few months, including the trial of a 100Mbps superfast Fibre-to-the-Premises offer in March, and an entry-level fibre optic broadband service offering downloads speeds of up to 40Mbps to smaller firms for £23 per month.

Earlier this month, it also launched a service known as Business Talk SIP which offers a more advanced form of voice over IP which businesses can use to make free telephone calls via the internet to office and home workers.

Speaking about the launch, the company’s head of product management Andrew Saunders said: “At Zen, we talk a lot about the convergence of voice, data and Internet access, and Business Talk SIP is a good example of how this can help businesses reduce costs and improve communications.”

During the year, Zen Internet’s net debt reduced by £2m to £10.5m.