On 26 May 2011, Forthnet plc, the Greek telecoms company, published its financial results for the first three months of the year to 31 March 2011. Forgendo (the joint venture company between GO and its majority shareholder Emirates International Telecommunications) holds 41.27% of Forthnet’s share capital. The Q1 2011 results reveal a 3.3% increase in revenue to €102.6 million with the adjusted EBITDA rising by 8.8% to €18.5 million when compared to an EBITDA of €17 million in the same period last year. This resulted in an EBITDA margin of 18%.
The Forthnet Group explained that during the first quarter of 2011 it continued to increase its subscriber base and to add customers that bundle Telecom and PayTV services. Revenue from the Telecom Business (consisting of ULL customers i.e. the higher margin business mainly encompassing a bundled package of fixed line and broadband services) surged 11.3% to €54.1 million. This sector contributed €11.9 million to the overall EBITDA figure. The Group explained that Forthnet is the leading unbundler in Greece with an overall market share of 31.9% as at 31 March 2011 with the number of Broadband subscribers increasing to 496,304. The Group explained that ULL is the key growth driver while demand for Broadband, 2play and other ULL services is expected to remain strong. Meanwhile with respect to PayTV (NOVA), revenue declined by 4.4% to €48.5 million. The PayTV business accounted for €6.6 million of the Group’s overall EBITDA. While the EBITDA from the telecoms segment showed a marked improvement of €8.1 million over the same period last year, the PayTV business registered a significant decline from €13.2 million in Q1 2010 to €6.6 million and a corresponding drop in margin to 13.6% in Q12011 from 26% in the corresponding period last year. Forthnet explained that the decrease in earnings is attributable mostly to Advertising and the Group’s Cyprus operations.
The balance sheet reveals that the Group’s cash balance as at 31 March 2011 stood at €29.1 million whilst total net debt amounted to €305.9 million. During a meeting held on 29 March 2011 with the financial community in Malta, Forthnet officials explained that the Group is restructuring its debt in order to push forward the repayment of €90 million of its outstanding debt. In this way, Forthnet stated that it should have enough time to grow its business, particularly its Pay-TV operations, and generate enough cash to repay its debt obligations. In the Q1 2011 results announcement the Forthnet Group confirmed that it has already initiated discussions with its lending syndicates with a view to refinance its maturing stock of debt for 2011 and 2012 and extend the repayment terms beyond 2013.