Go posts loss of €1.14 million

Communications group Go plc's half-yearly operating results, released on Tuesday, show a loss of €1.14 million, down from a profit of €1.04 million in the corresponding period in 2008.

The group said one-offs, including voluntary retirement costs of €7.26 million, had impacted the half-yearly results; €4.80 million were paid by June 30. Over 200 employees are set to leave the group by December, as a result of the voluntary retirement scheme which closed in May. Employees were offered pay-outs of up to €60,000.

Half-way through this year, Go's headcount amounted to 1,262, down from 1,413 from last December. Go said further headcount reductions would take place in the second half of this year.

Meanwhile, Go said it had finalised the internal reorganisation of the group and management structure.

Other major activities in the first six months of the year included the establishment of a pension scheme benefitting employees of Go's predecessor in title, Cable and Wireless, and settlements (in lieu of pensions) had been reached with over 80 people.

After providing for net finance expenses and the group's share of the results in Forgendo Ltd, amounting to €3.73 million, the group reported a net loss after tax of €5.43 million for the six months to June, compared to a net loss of €4.40 million in the corresponding period in 2008.

Operating activities from January to June otherwise returned a profit of €6.89 million (January to June 2008: €13.15 million).

Turnover for the period amounted to €61.12 million, down 4.8 per cent, despite an overall increase of 1.7 per cent in customer connections and services which have reached a "very healthy" 469,000.

The board is to determine dividend distribution for 2009 on the basis of the full year's results and no dividends are to be declared for the six-month period ended June 30.

Go attributed the impact on results to the economic downturn, increased competition leading to lower rates and tariffs, and regulatory effects on wholesale and retail rates.

As expected, revenue from fixed line voice services was down by €3 million (12 per cent). Regulations introduced in mid-2008 affected data services revenue which dropped by six per cent. Lower consumer spending, increased competition and aggressive retention offers caused mobile services to fall by three per cent.

The group's earnings before interest, tax, depreciation and amortisation, and after eliminating significant one-offs, declined by 28.5 per cent over the same period in 2008, to €18.61 million.

Despite the launch of a third mobile operator, namely Melita Mobile in February, and a handful of MVNOs (mobile virtual network operators), Go described the reduction in mobile subscribers as "marginal".

Chairman Sonny Portelli pointed out that the group witnessed growth in its TV and broadband internet client base: Go TV subscribers had exceeded the 41,000 mark. EU and local regulations had forced lower wholesale and retail revenues, impacting turnover. The group's strategy to invest in other ventures in Malta and overseas.

The company launched several offerings this year. Malta's first quad-play bundle - Home Pack - had seen "very successful take-up" and ensured customer retention and new business. A business version of Home Pack had also been launched. Other new offerings included Laptop Connect (a mobile internet package with free laptop), a youth-oriented brand MTV Mobile, and BlackBerry for pre-paid customers following the "very positive" response to other BlackBerry plans.

Go channelled some of its free cash flow funds to acquire a new subsidiary, the Malta-based Bell Net Group for €9.5 million in late April. The acquisition made Go the largest provider of data centre solutions.

Between June and July, Forgendo Ltd, the special purposes vehicle Go jointly controls with its major shareholder Emirates International Ltd, raised its stake in Greek telecoms group Forthnet to 37.1 per cent after an investment of over €7 million on the Greek Stock Exchange.

In 2008, Go plc's recognition of Forgendo's results cost it €15.6 million, but Forthnet's performance this year is showing promise. In the first six months of the year, Forthnet made a gross profit of €30 million compared to a gross loss of €4.6 million in the first six months of 2008. Revenue growth has trebled to €180 million, following the acquisition of TV operation Nova and a growing client base in telephony, broadband and TV.

Go also acquired additional tangible fixed assets this year.

After its second submarine fibre-optic cable to Europe was completed in December, Go continued its investment programme to enhance broadband access in the last mile towards customers' premises. Extension of nationwide TV coverage also continued while Go's 3G/HSDPA mobile broadband network is now available across the islands. Go said it is investing between 12 to 15 per cent of its operating revenue in local networks.

Go plc chairman David Kay said the group intended to defend revenue in market share in existing wholesale markets, and aggressively cut costs in the second half of this year.