The Malta Association of Small Shareholders will be writing to seek information from Go in an effort to understand the implications of the telecommunications company’s decision to exercise its right option to invest in Greek operator Forthnet.

Go, through its involvement in Forgendo, will be giving an interest-free loan (convertible into equity within six months) for its €6 million share of the €29 million that Forthnet wants to raise.

Go should be able to give a good dividend for the financial year

However, it is not clear what would happen if the other shareholders do not take up their allocation ­– putting pressure on Forgendo to take up more than the pro-rata amount linked to its shareholding. The company announcement made it clear that Go would exercise its oversubscription right “to the extent required in order to ensure that Forgendo retains control of Forthnet”. Rival Wind Hellas currently owns 32.3 per cent of Forthnet’s shares.

The MASS spokesman said Go’s considerable investment in Forthnet had been written off by December 2012 and that this investment could be a chance to recoup some of that money. However, he said that this was mere speculation – and that even if the value of the investment were to improve, it would only be in the medium to long term.

“Our concern is that even though the published accounts do not show loss of market base, the feedback we are getting is that there is a lot more that could be improved in terms of customer care if Go is to win back and retain customers. So we believe that investments would be better made in the short-term in the company’s direct interest.”

The spokesman also said that the association would be seeking information on where the money for the loan would come from – Go’s reserves or the shareholders’ dividends.

“Go has a good property portfolio which would come in handy for any eventual beefing up of reserves,” he said. “It is worth pointing out that during the AGM, it was already declared that the last payment of €0.10 net is not sustainable. Still, the association believes that Go is a cash-generating company and should be able to give a good dividend for the financial year.”

When contacted by The Times of Malta Business, Go declined to answer any of the questions about the board’s decision to go ahead.

“At this stage Go has no further comments to make in addition to what has already been made public through its announcement on the Malta Stock Exchange. Over the coming six months, Go will continue to update the market on developments as and when this is appropriate.”

Forthnet fact file

Group loss after tax
€42.9m Jan-Sep 2013
€46.8m Jan-Sep 2012

Group turnover
€280.8m Jan-Sep 2013
€302.9m Jan-Sep 2012