Lower revenue for GO
GO has generated €61.12 million in the first six months of the year, a decrease of 4.8 percent over the comparative period last year.
The decrease was in spite of an overall increase in the group’s customers’ connections and services.
In line with forecast, revenue from fixed line voice services declined by €3.2 million - a decline of 12 percent.
Local regulations, which became effective half way through in 2008, adversely affected data services revenue, which declined by six percent, while mobile services declined by three percent because of lower consumer spending, increased competition and aggressive retention offers.
According to the group’s financial statements for the first six months, operating results for the period show a loss of €1.14 million compared to a profit of €1.04 million achieved in the comparative period, after accounting for various significant one-off items namely, voluntary retirement costs (€7.26 million) an impairment loss on non-trade receivables amounting to €2.09 million and a decrease in the provision for pensions amounting to €1.32 million.
After eliminating the effects of these one-off items, the operating activities for the current period returned a profit of €6.89 million (6 months 2008: €13.15 million).
The Group’s earnings before interest, tax, depreciation and amortisation and significant one-off items (EBITDA) amounted to €14.88 million, a decrease of 36.3 percent over the comparative period.
Adjusting this result further by eliminating the share of loss made by the jointly-controlled entity, the Group’s EBITDA would amount to €18.61 million, a decrease of 28.5 percent over the comparative period.
After providing for net finance expense amounting to €0.71 million and the group’s share of the results of investment in Forgendo Limited amounting to €3.73 million, the group’s loss before taxation amounted to €5.37 million, compared to a loss of €1.42 in the comparative period to June 30 last year.
The net loss after tax amounted to €5.43 million compared to a net loss of €4.40 million for the six month period to 30 June 2008. The Group’s share of net loss, excluding results attributable to the non-controlling interest, amounted to €5.56 million during the current six-month period.
The group continued to generate free cash flows from its operations, which funds were utilised to acquire new subsidiaries, namely the Bell Med Group, acquire additional tangible fixed assets and further investment in the jointly-controlled entity, Forgendo Limited.
Notwithstanding the reduction in revenue, the group, through its marketing and promotional efforts, managed to mitigate the potential losses in revenue and results. The overall customer connections across all services of the group continued to grow and as at June 30 amounted to almost 465,000 services, an increase of 1.7 percent over the comparative period.
Growth in mobile subscribers continued at a slow rate in line with the market growth and conditions, while growth in TV and broadband continued in line with projections.
However, EU and local roaming regulations have contributed to lower wholesale and retail income per subscriber depressing further the group’s turnover.
The group is moving ahead with its strategy to invest in the upgrade of its networks and launch new technology to enable faster and more reliable connectivity. These investments also allow the group to launch new services and the Group continues to be the leader in voice and data services through both fixed and mobile networks as well as in the provision of digital terrestrial TV services.
The group’s success in retaining and growing its customer base and the anticipated benefits of right-sizing and reorganising the group auger well for improved results in the coming years particularly as the current economic trends improve.
No dividends were declared.
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Peter Korsten
Sep 3rd 2009, 12:08
And how was this call paid for? Subsidised by taxes. I'd rather not be paying for you staying on the phone all day, thank you very much.
Galea. L
Sep 3rd 2009, 09:42
Remember when we had TeleMalta before the PN came to power where you could stay a whole day on the phone for the cost of one call? Now we have been forced to adopt the market economy and privatization. This what market economy and the so much hyped privatization means. Money for private pockets instead of the Government, less people working and higher prices. Don't tell me about costs because can any private company beat the cost of one call for a whole day?
Peter Korsten
Sep 3rd 2009, 08:55
Privatisation and liberalisation (which are two different things) are not goals in itself. For some things, it makes sense; for others, it doesn't. One wouldn't want Mater Dei to be be privatised, and public transport would probably benefit from being government-run. But telecom companies should not be government-run, and opening the market HAS led to lower prices across the board; for fixed calls, mobile calls, international calls (which was prohibitively expensive even 10 years ago) and internet.
And stop comparing with abroad: you cannot compare the Maltese market with something like Italy or Germany. Companies in Malta will always have relatively large work forces because of the small market, and undersea cables don't come for free either.
The big issue is that current and former state-run companies employ way more people than there are real jobs (and it does not lead to quicker service either). This will always weigh in on their results. But I'm quite happy that fewer and fewer of my taxes go to subsidising these artificial jobs.
jcmicallef
Sep 2nd 2009, 20:20
One wonders what was the real impact of liberalisation and regulation.
What will happen when this extends to postal services and to other services like water and electricity (the former in 2013, the other a BIG maybe)?
But after reading what happened abroad, competition - though bringing a drop in price for certain services - the real benefits are very doubtful.
Fenech M D
Sep 2nd 2009, 18:36
UP TO A MONTH AGO I WAS A VERY SATISFIED CUSTOMER OF GO. I AM A HARD OF HEARING PERSON AND THE MOBILE PHONE IS AN ESSENTIAL TOOL FOR ME TO KEEP CONTACT WITH MY FAMILY BY THE USE OF SMSs. HOWEVER I WAS EXTREMELY DISAPPOINTED TO LEARN THAT THIS YEAR GO WILL NOT CONTINUE TO SUBSIDISE PEOPLE WHO ARE DEAF OR HARD OF HEARING, EVEN THOUGH GO’S CEO IS HAPPY WITH HIS COMPANY’S SUCCESS. WE WOULD BE GRATEFUL IF THE CEO WILL RECONSIDER HIS POSITION.
Peter Korsten
Sep 2nd 2009, 16:11
'...and the Group continues to be the leader in voice and data services through both fixed and mobile networks...'
This could be misunderstood as 'GO is the leader in mobile networks', which would be a rather optimistic assessment. It's the single word "through" that stops short of such a claim, a word that can easily be overlooked.
John Micallef
Sep 2nd 2009, 14:08
Let them face competition!!!
These are the effects of liberalisation, let who offers the best deals get the best market share!!
See my friends, so now not only the corner grocer has to compete with the supermarket, but finally it's getting the same on all tiers of busniuss!!
J. Mifsud
Sep 2nd 2009, 13:52
If GO wants to increase its customers and hold on to its existing ones, then they should immediately lower the phone rates and rentals. I have been a customer of Go (Maltacom) for over 30 years, and although I am quite satisfied with their service, I recently am thinking to subscribe with another supplier because they are offering better rates.
At this point in time, whilst everyone is being hit by the recession, you do not blame me if I manage to save some Euro.
joe vella
Sep 2nd 2009, 13:42
does this mean more staff to be axed?
angelica barberi
Sep 2nd 2009, 13:40
No dividents yet again. And the workforce still worried about their jobs. Way to GO...