GO plc - Interim Results

On 31 August, GO plc announced its 2011 half-year results revealing a 1.6% increase in turnover to €65.2 million mainly due to a sustained growth in broadband, data and TV services which compensated for a decline in traditional fixed-voice services. In fact the Group managed to increase its customer connections to 530,000 as a result of growth in these three service offerings. GO explained that during the first half of 2011 it experienced intense competition in the mobile market which also led to a decline in revenues from mobile operations despite the fact that the number of mobile subscribers grew. The Group’s operating profit before non-recurring items rose by 8.8% to €12.4 million. GO’s results were however negatively impacted by voluntary retirement costs and increased pension obligations amounting to €3.1 million which led the Group to register an operating profit of €9.2 million (June 2010: €11.2 million). Earnings before interest, tax, depreciation and amortisation (EBITDA) improved to €26.1 million when compared to €23.1 million in the first half of 2010.

GO plc’s positive local operations were however severely dented by the Group’s investment in Forthnet through the joint venture company Forgendo Ltd. Currently, Forgendo (the joint venture company between GO and its majority shareholder Emirates International Telecommunications) holds 41.27% of Forthnet’s share capital. During the period under review, Forthnet was negatively impacted by the Greek economic situation and the financial measures being implemented by the Greek Government to address the financial crisis. GO explained that although Greece’s financial environment is deteriorating, Forthnet maintained a leading position both in the telecommunications sector and in the Pay-TV business. During the first half of 2011, Forthnet continued to focus on expanding its customer base with bundled offers of Pay-TV and telecommunications by fully utilising the commercial synergies of its product range. In fact, during the first six months of 2011, Forthnet’s broadband customer base reached 472,000, whilst Pay-TV subscribers amounted to 358,000. This rise in customers resulted in a 3.8% increase in revenue to €206.3 million and a 14.9% rise in EBITDA to €40.3 million when compared to the same period in 2010. The prevailing economic environment in Greece however impacted Forthnet’s valuation of its investment in NOVA and Forthnet had to recognise a charge for the impairment of goodwill amounting to €38.2 million. As a result, Forthnet’s overall loss increased to almost €60 million (June 2010: loss of €32.5 million).

In turn, GO plc incurred a charge of €22.2 million on its investment in Forthnet leading to a loss of €17.3 million for the first six months of 2011 compared to a loss of €5.2 million registered during the same period last year.

GO explained that its strategy includes the continuing investment in and upgrading of its telecommunications infrastructure which enables it to offer innovative products in the coming years. In June 2011 the Group launched an IPTV service over its high-speed broadband network, offering the possibility of a wider channel suite, which also includes High Definition (HD) as well as interactivity features. Moreover, following the successful implementation of a new mobile core network (at the end of 2010), a new mobile radio access network will start to be used during the second half of 2011 which will ensure that the Group’s mobile customers will have the fastest and most reliable mobile network in Malta.

Moreover, during the first six months of 2011, the GO Group continued to downsize its operations and headcount levels are now below 1,000 which continues to help in its cost savings programme.

GO did not recommend the payment of an interim dividend.

Download a copy of the 2011 Interim Report of GO plc