Interim profits of telecoms carrier GO dipped into the red in the first six months of the year, following a number of what the company describes as “significant” one-off expenses.

The country’s largest telecommunications carrier announced a loss of e1.14 million for the first half of 2009, compared with profits of e1.04 million for the same period last year.

The company pointed out this week that if its various one-off items – including voluntary retirement costs amounting to e7.26 million, which had cost the company e0.32 million in the first half of last year – were to be eliminated from the equation, operating activities would have actually returned a profit of e6.89 million.

Group turnover amounted to e61.12 million, reflecting a fall of 4.8 per cent over the comparative period last year. The decrease in revenue has occurred in spite of an overall increase in the Group’s customers’ connections and services, which now total 469,000.

The results, according to the company, “are a reflection of three important factors that have impacted on GO’s revenues, namely the overall economic slowdown, the increasing competitive environment and ensuing lowering of rates and issuing of more attractive GO tariffs and offers in the market, as well as the effects of regulation on both retail and wholesale rates”.

“Despite these challenges,” the company adds, “GO managed to grow its customer base, and is well positioned to face the challenges and continue leading the local communications market.

“This is thanks to its good, innovative and reliable products and bundling of services, best level customer experience, investment in new technologies and continued cost reduction programme.”

In line with GO’s expectations, revenue from fixed line voice services declined by e3 million, representing a 12 per cent decline.

“Local regulations, which became effective half way through in 2008,” the company said, “have adversely affected data services revenue, which declined by six per cent, while mobile services declined by three per cent, driven by lower consumer spending, increased competition and aggressive retention offers.”

The group’s earnings before interest, tax, depreciation and amortisation (EBITDA) and after eliminating significant one-off items amounted to e18.61 million, a 28.5 per cent decrease over last year’s comparative period.

After providing for net finance expense amounting to e0.71 million, and the group’s share of the results of investment in Forgendo Limited amounting to e3.73 million, the Group’s loss before taxation amounted to e5.37 million, compared to a loss of e1.42 million in the comparative period to 30 June 2008. The net loss after tax amounted to e5.43 million compared to a net loss of e4.40 million for the six-month period.

The group reports that it continued to generate free cash flows from its operations, which funds were used to acquire a new subsidiary, namely Bell Med Group, acquire additional tangible fixed assets and further investment in Forthnet through the jointly-controlled entity, Forgendo Ltd.

In line with the group’s policy to “right-size and right-skill” its operations through retraining, voluntary retirement schemes and controlled recruitment, the group has agreed to compensate a number of employees to benefit from the early retirement scheme.

Based on accepted offers, the group said it has provided for e7.26 million, of which e4.8 million had actually been paid as at 30 June. The group’s head-count amounted to 1,262 as at 30 June compared to 1,413 as at 31 December 2008.

Further staffing reductions, it said, will take place in the second half of this year.

Commenting on the results on Wednesday, GO chairman Sonny Portelli said: “Notwithstanding the reduction in revenue, the group, through its marketing and promotion efforts, would not have managed to mitigate the potential losses in revenue had actions not been planned and executed. The overall customer connections across all services of the group continued to grow and as at 30 June amounted to 469,000 services, an increase of 1.7 per cent over the comparative period.”

Mr Portelli observed that while the group had experienced a slight decline in mobile subscribers due to the launch of the third mobile operator and MVNOs, it had experienced growth in its TV and broadband Internet client base. However, EU and local regulations have contributed to lower wholesale and retail revenues, thus depressing further the group’s turnover, hence its strategy to invest in new ventures both locally and overseas.

GO’s chief executive officer David Kay added: “The group is moving ahead with its strategy to continue building on its significant advantage in providing excellent customer experience, backed by its own valid human resources, reliable technologies and innovative services and products. We believe that investing in the constant improvement in our customer experience by training our people and improving our systems are key to continue leading the market. The group’s success in retaining and growing its customer base and the anticipated benefits of right-sizing and reorganising the Group auger well for improved results in the coming years, particularly as the current economic trends improve.

“The bundling of services into one package under the brand Home Pack has proved successful and we will continue pursuing such bundling of services in the coming months. We are confident that we have in place the right elements to continue succeeding.”

The Board of Directors has resolved to determine the extent of dividend distribution for 2009 on the basis of the full results for the year. Accordingly, no dividends are declared upon issue of the results for the six-month period ended 30 June.