Greek crisis fails to impact performance of group part-owned by Go plc

Greece's economic crisis has not impacted Forthnet, the Greek telecoms company in which Go plc has an indirect 18.55 per cent shareholding, chief executive officer and deputy chairman Pantelis Tzortzakis has told The Sunday Times.

Forthnet and its subsidiaries provide internet, fixed line telephony and pay TV services to over 800,000 customers in Greece and Cyprus.

"The demand for our broadband products in the last quarter was the best ever," Mr Tzortzakis, who was in Malta for a few hours, said. "We have seen increased demand on the broadband business, particularly as we offer great value for money for our customers. Our pay TV customer base has been stable. In the third quarter of last year, our main TV product was at an all-time high.

"Of course, it is not growing as fast as broadband, which is extremely popular, but never before did our satellite platform in Greece have so many customers.

"Our third quarter results show that we are one of the very few companies in Europe to sustain double-digit growth on revenue while at the same time improve our earnings before interest, taxes, depreciation and amortisation (EBITDA)."

Forthnet Group reported revenues of €272 million for the nine months of 2009, up from €119 million for the corresponding period in 2008.

It announced adjusted EBITDA of €53.9 million, from negative EBITDA in 2008.

Last year, Forthnet declared it would break the 300,000-subscriber mark for its TV offering. In early December, the company launched a major advertising campaign, announcing it had won 300,000 households. After publicising the further integration of Forthnet and Nova, Forthnet publicly announced in mid-January that it had already reached 320,000 subscribers, the chief executive said.

Go and its majority shareholder, Emirates International Communications, have a 37.1 per cent stake in Forthnet through their joint venture Forgendo. Go has invested €110.5 million in Forthnet to date.

In 2008, Go plc's recognition of Forgendo's results cost it €15.6 million, but Forthnet's performance continues to show promise. Its acquisition of Greece's only satellite TV operator, Nova, a year ago has boosted revenue. Group revenue stood at €93.2 million for the third quarter of 2009, up from €54.1 in the same period in 2008.

Set up in 1995 and listed on the Athens Stock Exchange in 2000, Forthnet is Greece's largest privately owned broadband provider, has a fixed voice arm, and a pay TV business in Greece and Cyprus.

Forthnet and Go are now studying the possibility of collaborating on TV content, and the two groups work informally on their technologies. Both companies say they are open to various forms of co-operation, particularly in terms of know-how transfer.

Nova has just won exclusive rights to broadcast the English Premier League for the next three seasons, an "important achievement" after the company renewed its rights to the Greek Super League. Nova also owns exclusive rights to an impressive sports content portfolio which includes the Champions League, Europa League, and the South American, Argentinian and Brazilian football leagues.

The sporting rights are the gems in a line-up numbering 200 channels which feature films, series, documentaries and children's programming, aimed at serving different audiences within households.

In its own studios, Nova produces all live events linked to sports programming. It has similar projects to showcase Greek content in collaboration with other companies, besides co-investing and co-producing some series and TV events.

The acquisition of Nova has catapulted Forthnet to clinch 99 per cent of the current pay TV market, counting 350,000 families among its subscribers. Greece has 4.2 million households. Greece's second pay TV operator, OTE, has less than 25,000. It launched a triple-play IPTV platform a year ago but has had limited commercial success.

Mr Tzortzakis, who has also been chairman and CEO of Nova since September 2009, explained that after acquiring Nova, Forthnet's immediate priority was to sustain the company's value.

Over the past nine months, its management has been busy securing and renewing sporting assets as part of a three-year business plan. Nova will now be restructured with a view to consolidate its integration with Forthnet.

Mr Tzortzakis explained that the integration of the two companies has allowed for competitive and highly attractive commercial bundling of products and services. Forthnet began to joint-sell pay TV, broadband and fixed voice services last September and the first indications are "quite positive".

The platforms are entirely different: pay TV operates from a satellite platform while broadband is terrestrial. This year, Forthnet is to work to bundle the two so that customers may enjoy interactivity between services.

Mr Tzortzakis said the addition of mobile to its service package is not a priority. Forthnet expressed an interest in Wind Hellas last year but never placed a binding bid for it.

The chief executive pointed out that the group operates primarily in two domestic markets where there is considerable room for growth.

"In the pay TV market, we have a penetration of nine per cent," Mr Tzortzakis explained. "In the rest of Europe, the pay TV penetration rate is 65 per cent, so we are in a market that is under-penetrated. We had substantial growth in broadband over the last two years, so there is still room to grow there. Mobile is a saturated market in Greece but if an opportunity arises that makes sense to us, we will consider the possibility."