Maltacom profits slightly up

Maltacom was considering the possibility of buying 50 per cent shares in a foreign company operating in Europe, Maltacom Group chief executive Stephen Muscat confirmed yesterday.

He was speaking at Maltacom's annual general meeting which inaugurated the new Conference Centre at Hilton Portomaso, in St Julian's.

During the meeting, shareholders approved a resolution for the issue of a dividend of 3c7.

Maltacom Group's turnover during 2002 was Lm54.6 million, increasing from Lm50.7 million the previous year. Pre-tax profit was Lm13.5 million compared with Lm13.1 million in 2001.

The group registered post-tax profits of Lm9.6 million for the year ending December 31, 2002, up from Lm9.3 million the previous year.

Discussion during the meeting centred on the drop in the value of Maltacom shares, which were being quoted at 88 cents, and on the company's 20 per cent shareholding in Vodafone, its competitor mobile communications company.

Outgoing Maltacom chairman Maurice Zarb Adami insisted that Maltacom should not rid itself of the shares before it obtained a just price for them. He estimated that Maltacom's shareholding in Vodafone was worth Lm16 million.

After an introduction by Mr Zarb Adami, who is being succeeded as chairman by Bank of Valletta chairman Joseph F.X. Zahra, Mr Muscat talked about the operational highlights of the year under review and touched on the key issues affecting the group.

He also referred to the value of shares, saying that the group had been hard hit on the Malta Stock Exchange but that many analysts had remarked that the depression in share price was exaggerated.

"We learnt only earlier this year that we are not being permitted to adjust our tariffs.

"Maltacom has a strong market position from which to ride out the situation, but the principle remains that if competitors are able to offer international connectiveness at auspicious rates, we must be allowed to rebalance our tariffs," Mr Muscat said.

Speaking on the performance of Go Mobile, Mr Muscat said the company had captured 42 per cent of the mobile telephone market. It had 150 roaming agreements in 80 countries and a total of 115,000 clients.

Referring to the 20 per cent stake in Vodafone, Mr Muscat said Maltacom had been informed by the Malta Communications Authority that Vodafone had started procedures to list the shares.

Harsh criticism of the workings of the outgoing board of directors came from Ray Fenech, who spoke about the failure of the chairman and directors to buy Maltacom shares which, he said, did not inspire confidence in the company. "How did you expect the value of shares to go up," he asked.

He also remarked about the company's negative cash flow of Lm9 million.

Dr Fenech said the balance sheet showed that Maltacom was not collecting debts. In 2001, Maltacom was owed Lm33 million, and this figure increased to Lm40 million last year. Its Lm1 million debt in 2001 increased to Lm11 million last year.

Maltacom's report had not mentioned that the company had a dispute with the VAT Department over a VAT claim of Lm2.4 million on international calls, Dr Fenech said.

Dr Fenech also noted that Maltacom loans to its subsidiaries of Lm1 million in 2001 increased to Lm3 million last year.

Replying to the criticism, Mr Muscat said one had to consider cash flow. He also said Maltacom had fallen back in billing.

With regard to VAT, Mr Muscat said Maltacom was informed that it was being investigated by the VAT Department for over Lm2.4 million worth of VAT over a three-year period.

However, Maltacom had not received the bill and it was not convinced it was obliged to pay that money. Therefore, this was a "contingent liability". Including it in the report would mean that the company was accepting to pay it.

He also defended the company's decision to issue loans to its subsidiaries, saying that was better than increasing capital.

Mr Zarb Adami said he did not buy company shares because he believed his decisions as chairman should not be influenced. "I represented the biggest investor - the government and the investing public - and there was no need to have personal shares."

During the meeting, minority shareholders elected Mr Muscat, Peter J. Baldacchino and John Ellul Vincenti as directors.

Apart from Mr Zahra as chairman, the government appointed Vincent Farrugia, Sonny Portelli, Saviour Sciberras and Alex Tranter as its directors on the board.