The FINANCIAL — Metromedia inc said number of MagtiCom active subscribers for 4 months in 2009 reached 1 364 166. Total Gross Revenue consisted GEL 111 342 328.
Following is a comparison of MagtiCom highlights for the 4M 2009 vs. 4M 2008.
Revenues of 111 million vs. 132.7 million – decrease of 16.1%
EBITDA of 66.9 million vs. 84 million – decrease of 20.5%
ARPU of GEL 15.77 vs. Gel 19.90 – reduction of 20.8%
Despite difficult trading conditions driven by global economic crisis and political instability in
Georgia, MagtiCom’s financial performance was strong and year to date is better than the same period for 2007, company said in official press-release.
“The decrease in gross revenues is driven by decreased minutes of usage; a decrease 0f 16.4% from the first four months in 2008. On net calls decreased by 18% form the first four months of 2008. The decrease of cost of revenue is attributable to further cost control and management whilst increase in OPEX is due to increased investment in marketing and roll our of new services including MagtiFix”, company reported.
During the first four months of 2009, MagtiCom has focused on developing Magtifix a wireless in home telephony offering. The take up of the service has been very strong with approximately 58,000 subscribers. In addition to obtaining new subscribers, who may otherwise seek a fixed line, new subscribers to Magtifix presents an opportunity for cross-selling and bundling of services.
The performance of Bali, MagtiCom’s lower priced brand/offering, has been strong. During he first four months of 2009 Bali On-Net revenue increased by 1.6 million (27%) over the same period in 2008. This represents a 75.4% traffic increase in Bali On-Net calls and a 27.7% average price decrease for On Net calls. Distinct subscribers using On Net Calls increased by 11.5%.
Metromedia said that given its MagtiCom’s strong financial position vis a vis other market participants in the Georgian telecoms market, MagrtiCom is reviewing expansion outside of mobile telephony services through organic and M&A activity.
With respect to the Georgian Lari and currency risk, during the first four months of 2009 the $US/Lari exchange rate has remained stable at $US/Lari of 1.65. Unlike the development of many other emerging over the past 3-5 years, Georgia did not experience: high levels foreign currency denominated debt, high asset inflation and dependence on commodity exports. Foreign aid support from the US and other countries remains at high levels.
On 5 June, 2009, the Delaware Court of Chancery entered an award in the appraisal action against MIG, Inc. resulting in a judgment against MIG of US $188 million. The Chancery Court found that the rights of the preferred shareholders are governed by the Certificate of Designation and then interpreted the Certificate of Designation to determine the monetary value of the award. MIG believes that the Chancery Court incorrectly interpreted the Certificate of Designation.
MIG said it is unable to pay the award as granted by the Chancery Court.
In official press-release MIG said it also believes that it has a strong case at appeal. Accordingly, on 17 June, 2009, MIG filed for Chapter 11 bankruptcy protection in the US Federal Bankruptcy Court in Delaware.
The Chapter 11 filing will allow MIG to protect and maximize its valuable telecommunications assets in the Republic of Georgia and address its existing liabilities including, the final award and certain legacy and other liabilities in the US. MIG's Chapter 11 filing is intended to maximize value for all of its stakeholders. The Chapter 11 filing will allow MIG to pursue an appeal and provide time to reorganize its business.
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