Tiscali Reports on H1Tiscali Reports on H1
Tiscali reports first net profit, €14.5M, on revenues of €353.7M which were up 11% on the first six months of 2004
September 23, 2005
CAGLIARI, Italy -- The Board of Directors of Tiscali has approved today the Group’s first-half results to30th June 2005.
Revenues of EUR 353.7 million were up 11% on the first six months of 2004 (EUR318.8 million). Growth in revenues was driven mainly by the access segment, whichaccounted for 74% of the Group’s revenues (EUR 262.6 million).
In this segment, there was a marked change in the revenues mix compared to 1H04,with a significantly higher contribution from broadband services (56%) than dial-up(narrowband) services. There were 330,000 new broadband customers in the first half,which brought the total number of ADSL subscribers at 30 June 2005 to around 1.4million (an increase of 34% on 31 December 2004): over 250.000 were receivingunbundled services. With commercial offers aimed at increasing the take up of doubleplay (voice and data), several ADSL customers are switching from wholesale tounbundled services. The total number of active dial-up customers was 3.4 million,reflecting the continuing decline in the dial-up user base, in line with the market.
In first half 2005 voice revenues stood for EUR 44.0 million (12% on revenues), 9%down compared to EUR 48.2 million (15% on revenues) as of 30 June 2004. Revenuesslow down is mainly due to the refocus of the offer of traditional voice services in favorof VoIP services, contributing to a higher profitability. The trend was partially off set bythe launch of “bundled” CPS voice services (code pre-selection) in UK.
Revenues from business services came in at EUR 28.5 million (8% of revenues), anincrease of 6% on the EUR 26.9 million (8% on revenues) recorded in 1H04. The rise isdue to the organic growth supported by a commercial refocus.Portal (Media & VAS) revenues, at EUR 14.6 million (4% of revenues) were slightly up(+2%) on the EUR 14.4 million (5% on revenues) posted at end-June 2004.The positive trend is due to organic growth. iIn first half 2005 the main contribution tothe business line revenues is generated by advertising, the strategy also aims atimproving VAS and content revenues.
Operating costs totalled EUR 140.0 million, an increase of 17% on the first half of2004 (EUR 119.6 million) in absolute terms. These costs moved from 38% on revenuesin 1H04 to 40% at June 2005. This increase in the absolute value is attributable tosignificant investments in marketing to support the expansion in broadband services.
Marketing costs at EUR 64.9 million represented 18% of revenues compared to EUR41.3 million (13% on revenues) in 1H2004. The increase is largely related toadvertising for broadband services, with a greater focus on the UK market, main driverof the Group’s growth in the semester.
Personnel costs were essentially stable at EUR 54.3 million, versus EUR 54.7 millionin 1H04 (falling from 17% to 15% of revenues), the number of the employees at June30, 2005 was 1,846.
General costs fell from EUR 23.6 million (7% of revenues) in 1H04 to EUR 20.8 million(6% of revenues) as of June 2005, thanks to further rationalisation.Gross Operating Profit (EBITDA), before amortisation, depreciation, provision andwrite downs came in at around EUR 52.4 million, more than doubled versus EUR 20.1million at 30 June 2004, a rise from 6% as a percentage of revenues to 15% in the firstsix months of 2005.
Such operating results have been achieved, in addition to the revenues dynamicsillustrated in the previous paragraph, also by cost downsizing and by the efficienciesperformed.
The trend shown by variable costs linked to the significant increase of ADSL ULLcustomers within access segment has determined the improvement already at GrossMargin1 level which increased, as a percentage of revenues, from 48% on 1H04 to54% on the same period of 2005.
The Group reported an operating loss (EBIT) of EUR 46.4 million, after amortisation,depreciation, provision and write downs, a marked improvement (+31%) on the loss ofEUR 67.0 million, posted at 30 June 2004. The performance is the result of thesignificant improvement in gross operating profitability.
In 1H2005, the amortization of tangible and the depreciation of intangible assetsamounted to EUR 68.4 million compared to EUR 61.0 million registered in 1H2004.The increase is due to the considerable investments made to roll out the ULL network.Provision and write downs (together with other restructuring costs), were EUR 30.5million compared to EUR 26.1 million in 1H2004.
The company made a pre-tax profit (EBT) of EUR 59.6 million on compared with aloss of EUR 123.3 million in 1H04. This includes in 1H05, the net profit generated fromthe disposal of assets (discontinuing operations), EUR 125.7 million, mainly due to thecapital gain generated on the sale of the French subsidiary Liberty Surf Group SA(EUR 144 million).
The half-year ending 30 June 2005 closed, for the first time in Tiscali’s history, with anet profit of EUR 14.5 million, to be compared to a net loss of EUR 123.8 million as ofJune 2004.
Net result of the period includes taxes for EUR 45.1 million related to the capital gainresulting from the contribution of the Italian businesses activities from holdingcompany into Tiscali Italia S.r.l. Such tax charge, however, does not correspond to atax disbursement, but only to a partial use of the tax assets already accounted for inprevious years. The posting of the eventual additional deferred taxes will be assessedat closing of full year accounts for 2005.
Investment totalled EUR 67.5 million (19% of revenues) and were mainly related to theextension of the Group’s unbundled network and to connecting and activating newcustomers. This compares to investment of EUR 36 million in 1H04.Thanks to further upgrading, Tiscali’s network now has improved coverage. In Italy, atthe end of 1H05, Tiscali’s unbundled network had over 310 colocations active, givingcoverage of around 25% of the addressable DSL market (30% end of July). In theNetherlands, the Group now covers over 60% of the addressable DSL market. In 1H05investments in unbundling in the UK has commenced, leveraging on the improvementof the market regulatory outlook, while in Germany Tiscali will begin testing unbundlingin the Frankfurt area from 2H05.
You May Also Like
5G Network Automation and AI at Global Megaevents: A Telco AI-at-scale case study with Ooredoo and EricssonOct 10, 2023
5G Transport & Networking Strategies Digital Symposium.Oct 26, 2023
Improve Service Efficiency in the Call Center and Field with Slack AutomationOct 13, 2023
Open RAN Evolution Digital Symposium Day 1Jul 26, 2023