Third quarter results exceed Maltacom's expectations
by David Kelleher
Maltacom has posted a pre-tax profit of Lm9.5m for the first nine months of the year, a 28.7 per cent increase on the same period in 1998, chairman Maurice Zarb Adami announced on Monday.
"Maltacom's outstanding third quarter results show the continued progress being made by the company on all fronts.
"Our strategy of increasing income, reducing expenditure and expanding value-added services is being successfully realised by the company through a variety of measures," Mr Zarb Adami said.
The figures, which were above third quarter projections, are primarily the result of an increase in revenue from domestic fixed line telephony, cellular services, international connection traffic and rentals.
Mr Zarb Adami said that through its continuous restructuring after privatisation and the success on the local and London stock exchanges, Maltacom had strengthened its financial position.
"We have improved on expectations and our affiliate companies such as Vodafone, Terranet and Datatrak have contributed to the improved performance. Share prices have also reached the highest levels," Mr Zarb Adami said.
The main factors for success, he added, were the combined effort of the workers and better quality services.
He said that in the period under review, turnover had increased by 14.8 per cent to Lm32.7m, while operating profits before exceptional items rose by 27 per cent to Lm9.1m.
Mr Zarb Adami said that cash generation from operating activities had gone up by 33.8 per cent.
"The increase in revenue was affected by a steady growth in local and international telephony traffic, and we intend to continue improving on traffic figures," Mr Zarb Adami said.
International outgoing voice traffic went up by 6.8 per cent, domestic traffic volume by 11.9 per cent. Local cellular interconnection traffic up by 40 per cent, while international cellar interconnection traffic increased by 67 per cent.
Mr Zarb Adami said other factors determining the results were an 11 per cent increase in rental income and an improvement in debtor days.
He said that operating costs had increased slightly to Lm23.6m from Lm21.3m, however operating costs as a percentage of turnover was lower at 72.1 per cent.
Revenue per employee grew by 24.3 per cent from Lm15,890 to Lm19,757 in 1999, with lines per employee increasing from 107 to 121.
"Although these figures are positive they are still below the European average of Lm36,060 per employee and 213 lines respectively," Mr Zarb Adami said.
Earnings per share for the first nine months increased by 1c6 to 6c6 with the annualised earning expected to be 8c8, up from 6c7.
Strategic partner
The Maltacom chairman said the further privatisation was possible through the presence of a strategic partner, however he emphasised that the company had not been looking for one, although many names had been mentioned.
"The Minister of Finance, as part of its privatisation plan, was looking for a possible strategic partner. The company, however, has not been involved in this issue," Mr Zarb Adami said.
He added that at the end of the day, it was up to all the shareholders to take the decision, even though the government was a major shareholder with 60 per cent.
Workforce restructuring
Maltacom expected to reduce the workforce headcount to 1,300 by the year 2003, he said, adding that the retirement scheme would be relaunched. "We hope that many more workers will take up the early retirement offer," Mr Zarb Adami said.
Since 1997, the workforce had been reduced from 1,761 in December 1997 to 1,539 in September of this year.
Strategic objectives
Mr Zarb Adami said the first phase of restructuring had been completed and projects to introduce other data services including Websave, ISDN, ATM and ADSL.
"Terranet has launched multimedia and e-commerce applications such as DiveText and E-shore. We will also be making better use of our licence and other assets and hope to launch a range of wireless and cordless services. We will also be exploiting our satellite rights in the company's licence," Mr Zarb Adami said.
Millennium offers
Maltacom also announced yesterday that it had decided to liberalise the use of telephone sets for first time customers. In the past, Telemalta used to provide the set for first time customers and any additional set were purchased by the client.
"Now we are lifting this restriction and first-time customers will be able to choose a set of their choice," Mr Zarb Adami said.
He said Maltacom was also giving a good offer on its pagers with a rental rate of Lm2 per month. This offer is valid until the end of December.
"We are trying out video-conferencing facilities and expect to roll out these services in the immediate future. These services are aimed at companies in Malta and Gozo," he explained.
In its efforts to improve customers relations, Maltacom will also be issuing a newsletter keeping clients up-to-date with developments and new services being offered, Mr Zarb Adami said.
Telecoms regulations
No decision has been taken on whether to take legal action with regards to the recently published Telecommunications and Data Services regulations, Mr Zarb Adami said.
According to the agreement signed between Maltacom and the government in January 1998, the company is given sole recognition as the country's telecoms provider. However, the new regulations also give Melita Cable plc the same status. "We are still studying the regulations to see what action can be taken. Our legal counsel has told us that there is no immediate reason to take legal action for the time being. This does not mean we will not be taking action but we simply have not taken a decision yet," Mr Zarb Adami said.
Pink Call Centre
Mr Zarb Adami described the future of the Pink Call Centre in Malta as "encouraging", not promising. He said that Maltacom had already signed one contract and was evaluating others.
"The situation is encouraging, not promising, because we have not had any income as yet. But we are confident that it will be successful," Mr Zarb Adami explained.
| 
