GO plc - Interim Directors’ Statement

On 5 May, GO plc issued its Interim Directors’ Statement providing an update on the Group’s performance during the first part of the current financial year ending 31 December 2014.

The Directors noted that the Maltese telecoms market remains highly competitive leading to significant price erosion and lower levels of average revenue per user (ARPU). As a result, given the high penetration across all product lines, market share remained fairly stable but all local telecoms operators registered lower overall revenues. The announcement further explained that the Group’s investments during the second half of 2013 in solutions, technology and customer experience were leading to the desired results. This enabled GO to address a compact and challenging market whilst retaining its position as the leading provider of telecommunication services in Malta. This positive momentum has so far been sustained in the first part of 2014 as GO was able to protect its client base.

Concurrently, GO continued to pursue an intensive programme aimed at delivering a sustainable reduction in operating costs. The Directors explained that efficiency measures taken in recent years are enabling GO to significantly mitigate the impact of downward pressure on its revenues. These cost containment measures have contributed to an improved overall performance during the first quarter of 2014 compared to the same quarter of 2013.

The announcement also made reference to the recent international investments undertaken by the Group in pursuing its long-term growth strategy. GO advanced a €6 million loan to Forgendo which it can convert to equity by 15 July 2014. If GO does not opt to convert this loan into equity, Emirates International Telecommunications (Malta) Limited (EITML), the other shareholder in the Forgendo joint-venture, will repay the loan to GO and its shareholding in Forgendo will subsequently drop from 50% to 5.88%.

In March, GO finalized an agreement with Cablenet Communication Systems Limited, a cable company based in Cyprus. Cablenet is a profitable company that provides fixed voice, internet and TV services to more than 41,000 subscribers. Through this agreement GO will provide Cablenet with a convertible loan of €12 million. Should GO decide convert this loan into equity, GO will hold 45% of the issued share capital in Cablenet. Additionally, the agreement also grants GO the option to acquire majority control of Cablenet in the future.