First quarter after-tax profit for Maltacom slightly down

Company accuses Vodafone of attempting to hinder go mobile's work to make roaming arrangements. But Vodafone denies accusation

Maltacom's pre-tax profit has risen by 11 per cent, to Lm2.9 million, in the first quarter of 2002, while its profit after tax is down by 2.7 per cent, to Lm1.9 million, over the same period last year, due to a higher tax charge.

The group's financial results for January to March, published yesterday, show that it registered progress in almost every sector.

Total group turnover for the first quarter increased by 11.2 per cent to Lm12.8 million, while the earnings before interest, taxation, depreciation and amortisation increased by 5.6 per cent to Lm4.8 million.

During the quarter ending March 31, profit from direct operations was up by 10.2 per cent to Lm3 million, while revenue from customers' rentals, mobile traffic and mobile interconnection, carriers' revenue, internet and internet-related services continued to increase to 12.9, 40.5, 52 and 12.6 per cent respectively.

Revenue from local calls and international fixed line telephony revenue decreased by 12.6 and 11.5 per cent respectively - reductions that were counteracted by the increased use of mobile telephony. Rental income from fixed lines also decreased slightly by 0.6 per cent.

International incoming interconnection traffic was up by 9.7 per cent and domestic and international mobile interconnection traffic increased by 15.1 and 26.6 per cent respectively, resulting in a revenue increase of 18 per cent.

Cash generation from operating activities increased by 58 per cent (Lm5.5 million), Group Earnings Per Share remained at 1c9, while Company EPS decreased to 1c9 from 2c2.

The revenue generated by the group on the sale of goods sustained a decrease of 54 per cent primarily due to a decrease of sales of mobile phones and packs by Mobisle Communications Ltd, the company said.

During the quarter, Maltacom Group invested Lm4.2 million, which was higher than investment levels reached during the comparative quarter.

Maltacom chairman Maurice Zarb Adami said developments since December, 2001, included an increased mobile customer base. The figure had risen to 85,000 from 83,000 in March - over 37 per cent of the market share - and the target by the end of 2002 is 100,000.

Mobile voice telephony continued to grow and challenge the fixed line business. But, despite the shift to mobile telephony, fixed line business was still considered to be important.

The major rate of growth in 2001 - mobile subscriptions were over-sold in the Christmas period - could not be maintained, he said.

Mr Zarb Adami said 73 roaming agreements had been set up in 52 countries. He claimed Vodafone was attempting to hinder go mobile's attempts to make roaming agreements, but that this "big bully" approach would only be to Vodafone's detriment in the end.

Maltacom had been asking the regulator to ensure a level playing field, but had not yet been successful in stopping Vodafone's attempts at blocking it from using roaming facilities.

Vodafone managing director Joe Grioli categorically denied that Vodafone ever put any obstacles in the way of go mobile's roaming agreements.

Maltacom was studying the situation of the rebalancing of tariffs. However, the reduction of high international tariffs, which subsidised local calls and social services, would translate into the reduction of the latter, or an increase in local costs - something Maltacom did not intend to do at the moment.

Speaking about the financial results, Mr Zarb Adami said they reflected the changes in the industry.

Regarding future prospects and plans, he said Maltacom would continue its in-depth restructuring. It intended to expand its platform for the high-growth segments of the market, namely internet and e-commerce enabling services in particular.

Telepage refurbishment to expand seating capacity from 46 to 100 is under way, and the Valletta Network Rehabilitation project is also progressing.

Maltacom intended to extend the project into Floriana and other parts of Malta over the next year, but Mr Zarb Adami stressed that it would be foolish to invest in upgrading infrastructure and services unless the company was sure it would benefit from the capital investment.

If not, it would be a waste of the shareholders' money, he said, adding that the regulator had to clarify under what conditions the company would be operating in future.

A second system of digital TV over telephone lines was being tested next week, following which decisions would start to be considered.

The changeover to the new billing system had delayed the process by a few weeks, but was expected to get back on track by September, Mr Zarb Adami said.

A total of 498 employees have applied for the company's voluntary early retirement scheme, meeting targets set at the initial public offering in 1998 and amounting to 500 employees. In 1998, Maltacom had 1,800 employees, which it had intended to reduce to 1,300, but had surpassed that target. It would continue to offer the scheme to reach a total of 1,000 employees.

Mr Zarb Adami augured that the divesting of Vodafone shares would "have a happy ending in the not too distant future," despite the obstacles that Vodafone has laid down. The shares would be sold at a "fair" price, he said.

Again, Mr Grioli commented that the issue was a shareholder's matter and was dealt with by the stakeholders involved.

The company would also be tapping niche markets overseas.

The chairman said the board would be considering whether they would continue to publish the group's quarterly results in view of liberalisation and competition.

It would announce its decision whether to only publish the results of June and December, in accordance with the statute, at the presentation of the June financial results.