Communications group Go needs to ensure increasing turnover and profitability based on its increasing customer base while continuing to optimise costs, chairman Deepak Padmanabhan told The Sunday Times.
Despite the group's determination to return to profitability, the results for 2009 are worse than last year's: On Wednesday, Go plc reported a pre-tax loss of €3.2 million for the year ended December 31, 2009, compared to a €0.3 million profit in 2008. Operating profit reached €7.4 million, down from €13.3 million the previous year.
Go's directors are recommending a final dividend of €0.10c net of tax per share for the approval of shareholders at the annual general meeting on May 17.
"There is no doubt 2009 was a particularly difficult and challenging year," Mr Padmanabhan said. "Go's services have been impacted by the international economic climate, as well as the increased competitive environment and the impact of regulation of certain tariffs. Go was facing significant challenges related to its continued transformation as an organisation."
On the positive front, Go increased its customer connections by 22,000 in one year - from 456,000 in December 2008 to just under 480,000. The group now hopes to reach the half million connections and services mark this year.
Asked why increased customer connections failed to translate into increased revenues, Mr Padmanabhan said demand for various core services remained strong last year and the group continued to manage the decline of traditional fixed-line voice services - "a significant achievement" - by maximising on the growth opportunities of broadband and TV services. Revenue from mobile services dropped through a combination of increased competition and weaker demand.
Right-sizing cost Go €11.5 million in 2009, with the legacy company's current headcount now standing at 1,100, from 2008's staff complement of 1,413. Staff shedding was undertaken through costly voluntary retirement schemes which negatively impacted the 2009 results.
Mr Padmanabhan emphasised efforts to right-size Go will begin to pay dividends this year, both in terms of the bottom line and in operational efficiency. The headcount numbers will continue to be addressed this year as will other cost items to ensure improved results, he said.
Meanwhile, Go's €9.5 million investment in the 60 per cent stake of the BM Group last year appears to have started to pay a "healthy" return, but its €110 million outlay in Greek telecommunications group Forthnet still requires patience.
"Go is looking to grow inorganically as well, through investments which are not necessarily within its core business here in Malta," the chairman explained. "It is encouraging to note that Forthnet in Greece continues to register strong growth in its client base, revenue streams and EBITDA levels, and Go is confident that in the medium term this investment will start to make a positive contribution to results. BM is a major data centre operation in Malta, and this investment will provide Go with further growth and synergies in the coming years. Go is looking into other opportunities, both local and international, to grow its business."
Mr Padmanabhan emphasised that Go was entering a new era in electronic communications, one in which it will have to evolve from purely owning and competing on "the pipe" on which services are delivered, to innovating on and mastering the services themselves.
The group is "cautiously optimistic" about 2010, expecting further growth in internet and TV, especially as a result of the exclusive acquisition of the rights to the English Premier League and the Italian Serie A.
Go announced this week it is pursuing plans for next-generation networks, especially in the fixed broadband access services, which Mr Padmanabhan said, fell under the group's important role in Malta's 'Smart Island' vision.
"Subject to certain conditions and clarity on the regulatory framework by the authorities, Go will start to deploy a fibre network to the home, in conjunction with the wider upgrading of the current network, specifically in the last mile towards the users, with the installation of new cabinets which provide higher internet and data speeds," the chairman explained.
Go is also to make a significant investment in its core mobile network, which is already based on 3.5G or HSDPA technology, to increase the mobile data capacity on the strength of the popularity of a number of 'on the move' data applications and packages such as Laptop Connect, Blackberry and Go's popular internet key.