2006 - important milestone year for Maltacom

Maltacom Group announced its financial results for the year ended December 31, 2006. The group maintained its turnover levels and last year's revenue amounted to Lm55.5 million. The group's profit before tax is Lm12.1 million. Profit before one-off items and voluntary retirement schemes (VRS) is Lm15 million, which compares well with the results achieved in 2005.

The group is experiencing strong growth in broadband, mobile and call centre services resulting in growth in group revenues which in 2006 totalled Lm55.5 million. This made up for the decline in revenues from traditional fixed line services which continued in 2006. The profit of Lm12.1 million represents a decline of Lm4 million when compared to 2005, and is mainly affected by charges amounting to Lm3.2 million for VRS.

During 2006, the group's cost structures remained at 2005 levels. However, initiatives launched during 2006 are expected to deliver reduced cost structures, particularly within the fixed-line company, starting this year. One such major initiative is the VRS which is leading to a reduction of over 200 employees from fixed-line operations.

Earnings per share for the year amounted to 8c0 (9c9 if adjusted for VRS and one-off items) as against 11c1 in 2005 (10c6 if adjusted for one-off items).

Following an interim dividend of 1c5, net of taxation (2005, 2c0) which was paid on October 27, 2006, the board of directors is recommending the payment of a final dividend of 5c, net of tax (2005: 4c5) per ordinary share for the approval of the shareholders at the next annual general meeting to be held on May 30; the dividend will be payable on June 6. This net dividend will be payable to shareholders who are on the register of shareholders as at April 30.

Commenting on these results, Maltacom Group chairman Sonny Portelli said: "Last year the group managed to maintain its revenues in the face of intense competition and extensive regulation of the core services. We maintained group profitability levels, if one-time charges and VRS are excluded. The decline in traditional fixed line core services is being compensated by growth in broadband and mobile services. Moreover, the continued trend of significant cash generation and strong balance sheet was maintained."

Mr Portelli added: "2007 will be a year of transition. A number of changes are taking place that will help us transform the way we do business. I am confident that we are well prepared to face any challenges and move forward to grow our business. This will be a year in which we will focus strongly on enhancing customer experience. Moreover, within a quadruple-play strategy, we will continue to actively compete in the TV market."

Maltacom Group chief executive officer David Kay said: "2006 was a milestone year for Maltacom Group marked by the privatisation and the ensuing process of changes brought about by this important development. We have set new overall strategic objectives of the Maltacom Group for the coming years which will see a transformation of the organisation, especially in the fixed-line business."

Mr Kay added that 2006 was characterised by a changing landscape in the telecoms market, with the introduction of number portability, carrier select/pre-select, as well as the entry of new players, especially in the fixed-line business.

"Part of our strategy to counter the new market entrants was to launch a series of commercial initiatives aimed at ensuring that we retain our customer base. Moreover, in 2006 we initiated the process of acquiring Multiplus - an exercise which was concluded in February 2007. With the acquisition of Multiplus, Maltacom became the only local quadruple-play telecoms organisation offering fixed, mobile, broadband Internet and digital television," he added.

Another important milestone for 2006 was the agreement signed between Go Mobile and Nortel Networks for the roll-out of a 3G network this year. All these important developments were implemented within a new corporate structure that focuses on the group's main business units, and which is based on the group's strategic objectives.

During the year, Maltacom continued with the streamlining of its fixed-line operations and Coreswitch Limited and Wirenet Limited were merged into the company. Furthermore, the process was set in place to also merge into the company another two subsidiaries, DataStream Limited (Maltanet) and Monitoring Services Limited, effective from last January.

In November 2006, Maltacom completed a €6.7 million Fixed Line Switching Network Upgrade project by migrating this platform to softswitch technology, thus ensuring a sound platform for future enhanced services. This upgrade will facilitate the eventual roll-out of next generation services, such as services resulting from the convergence of fixed and mobile services.