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Starcomms posts N829m operating profit
August 4, 2009

Starcomms Plc, Nigeria's leading full service CDMA telecommunications operator, has announced its second quarter for the six months ended June 30, 2009.  In spite of the current economic challenges and highly competitive operating environment, the company almost doubled its subscriber base while it increase its Earnings Before Interest, Exchange Differences, Taxes, Depreciation and Amortisation (EBIETDA) by about 200 per cent over the corresponding period.

The company said in a statement at the weekend that it also increased its subscriber base by 95 per cent to more than 2.484 million active subscribers in the period compared to 1.273 million in the first half of 2008, passing a number of key network development milestones and introducing a series of market-leading initiatives to further improve its network experience, strengthen customer loyalty and improve revenues and margins.

The statement said during the period under review, the company also added five cities - Awka, Kastina, Nnewi, Sapele, and Umuahia - to its network thereby bringing the total to 28 cities in 20 states, the statement added that Bauchi, Enugu and Jos will be added to the network shortly.

Starcomms said its total net revenue grew by seven per cent to N16.919 billion as against N15.805 billion during the corresponding period of 2008.
It attributed the result largely to its enlarged subscriber base, adding that EBIETDA grew by 193 per cent to N4.727 billion as against N1.614 billion in the corresponding period of 2008. 

The company returned to profitability, posting an operating profit of N829.1 million compared with an operating loss of N826.0 million in 2008. 

The company said for the first half of the 2009 financial year, it recorded an unrealized loss on foreign exchange of N3.767 billion, with most of this occurring in the first quarter.  It is planning to convert $60 million of its dollar denominated debt into a medium term Naira facility within the third quarter of this year in a bid to reduce its exposure to foreign exchange fluctuations in the third quarter and beyond.

The company said it has a strong balance sheet, with N9.393 billion in cash and cash equivalents at June 30 2009, and that its operational requirements and planned expansion in the second half of the financial year are fully funded. 
The company continues to be EBIETDA positive, with an EBIETDA margin of 28 per cent, which exceeds most operators in the CDMA sector. 

The directors of the company are confident that barring unforeseen circumstances the improved operational performance would be maintained during the second half of the year.
Mr. Maher Qubain, chief executive officer of Starcomms, said the company is focused on delivering significantly improved financial results for the current year and he is pleased to report that they made excellent progress towards this goal in the first six months of 2009. 

He said, "Our strategy for 2009 called for reduced capital expenditures, reduced subsidies on handsets and stringent operational efficiencies, all of which have contributed to a significant year-on-year improvement in our performance."
He said with a focus on customer retention and enhancing revenues, they made further improvements in network quality and customer service, while continuing to introduce new initiatives such as "Direct Access to the CEO, adding that such continued improvements have sustained Starcomms at the forefront of innovation in the Nigerian telecom marketplace." 

Qubain said Starcomms has a very strong brand, one of the most advanced IP Next Generation Networks (NGN) in Nigeria and is in sound financial health and a strong platform on which to build future growth and profitability.

The company continued to lead the field in the introduction of higher value data services, rolling-out its market-leading iZAP 3G Broadband products to Ibadan and Calabar, and successfully launching data services in Maiduguri. In the second half, the company will launch iZAP in two other markets. It was this continued progress that helped underpin a 58 per increase in active data subscribers, which increased to 124,178 in the period from 78,778 in the previous year.

The Financial Standard, Tuesday August 4, 2009

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