Cuts in mobile roaming and termination rates dent GO revenues

Telecommunications firm GO plc delivered another positive performance in the first six months of 2013, registering an operating profit before non-recurring items of €10.4 million, a slight reduction of €0.13 million over 2012.

The results were both negatively impacted by voluntary retirement costs and pension obligations, dropping the Group's profits from €11.4 million during the first six months of 2012 to €9.4 million during the period under review.

GO's profit before tax during the first six months of 2013 was €8.3 million. The comparable figure for 2012 was €20.4 million which, however, had reflected an exceptional gain of €11.4 million attributable to the sale of a plot of land in Qawra to the Maltese government.

The Group's revenue amounted to €60.5 million compared to €63.6 million in 2012 representing a reduction of 4.9%.  GO retains a strong client base servicing more than 500,000 connections across its main retail products including Homepack, the group's successful bundle of services aimed at satisfying all telecommunication needs of a household.

However, the telecommunications market continues to be characterised by intense competition across all product lines resulting in lower ARPU (Average Revenue Per Unit) levels.

The company also said that revenues continued to be negatively impacted by the ongoing annual reduction in mobile termination rates and roaming as mandated by the Malta Communications Authority and the EU.

Cost of sales and administration costs, excluding costs of an unusual incidence, amounted to €50.6 million, which represents a decrease of €3 million over the comparative period. Whilst the Group successfully pursued cost reductions in most areas, it also experienced increased incidence of costs in certain areas directly related to sales activity and exceptionally in the operation of its networks.

The Group's earnings before interest, tax, depreciation and amortisation (EBITDA) and before non-recurring costs, amounted to €24.1 million as against €24.5 million in 2012.

Yiannos Michaelides, CEO of GO, said that in spite of significant and intense competition in the telecommunications sector, during the first six months of the year GO managed to increase its total customer connections by 7,000.

"In particular GO reversed the decline in mobile market share and continued to experience growth in broadband connections, take up of Homepack and IPTV (Internet Protocol Television). The recent award of the rights for the English Premier League, together with other rights for the Champions League and Italian Serie A football confirms GO as the leading provider of quality premium TV. The acquisition of these rights is also in line with the Group's strategy of enhancing the overall customer experience and not just providing a robust infrastructure."

The first six months of the year were also characterised by significant planning and investment in the Group's various networks aimed at extending the reach of new technology, such as FTTH (Fibre to the Home) and IPTV, and upgrading various core systems to enable GO to continue delivering the best quality broadband, TV and mobile experience. These investments, together with the roll-out of the new mobile radio access network completed last year, mean that GO's mobile internet customers can reach speeds of up to 42 Mbps and that clients can enjoy unparalleled broadband experience seamlessly across both wired and wireless solutions.

GO chairman Deepak Padmanabhan said GO remains committed to a significant investment programme and we are encouraged by the loyalty of our customers and their response to the improvements we are constantly making to our services.  The dynamics of the market within which we operate, however, are characterised by on-going pressures on profitability levels. GO continues to outperform its peers thanks also to significant efforts to pursue greater efficiency.   Although pressure on revenue is not expected to abate, we believe that our strategy of ongoing investment coupled with improving efficiency will allow us to remain the service provider of choice for the majority of customers in Malta".

Whilst the investment in the Greek telecommunications company Forthnet, through Forgendo, has been written off, this investment remains on the agenda and is constantly monitored. GO is closely following recent events which highlight the strategic importance of Forthnet within the Greek telecommunications market.