Green Packet losses widen, but KPIs on track

PETALING JAYA: Green Packet Bhd’s net loss for 3QFY11 ended September may have widened year-on-year (y-o-y), but the company is still on track to breaking even at operating level by year-end.

CC Puan, group managing director and CEO told a briefing yesterday, “In terms of the group Ebitda [earnings before interest, tax, depreciation and amortisation] margin, we saw an improvement of 23% y-o-y. We are on track to be Ebitda positive by the end of this year.”

The group is on track to meet its other key performance indicators (KPIs), he added. Green Packet is looking to turn profitable by 2H12.

For 3QFY11, net loss rose to RM24.3 million from RM13.7 million the preceding year. According to notes accompanying its results, the deepening losses were the result of higher depreciation of plant and equipment in accordance with the planned rollout of broadband infrastructure and higher amortisation of intangible assets. Revenue, however, rose to RM134.4 million from RM100.9 million for the same period.

For the nine months ended Sept 30, 2011, revenue rose to RM383.9 million from RM277.7 million, with a higher net loss for the period of RM58.6 million compared with RM56.8 million last year.

Of its two core segments, Green Packet’s software and devices saw 3Q profit grow 71.2% to RM15.4 million. But the group was dragged lower by its broadband service division, which reported a RM119.9 million loss, higher than last year’s loss of RM115.9 million.

Even so, Puan points to improving Ebitda numbers and said trends look positive for the group.

“For the software and devices segment, we recently signed a contract with Pakistan WiMAX operator Wateen Telecom to deliver devices. We recently broke into the European market as well by signing a deal with [Spain-based] Telefonica,” he said.

Green Packet’s broadband service comes under the purview of Packet One Networks (Malaysia) Sdn Bhd (P1), which currently has a subscriber base of 356,000 users, whose monthly bill averages about RM70 per month.

While P1 chief executive Michael Lai conceded the landscape of the business will remain competitive, the company is positioning itself to ride the storm.

According to Lai, P1 has seen a good take-up rate for its “Potong Stim” and “One Plan” campaigns. “We are continuing to improve our coverage. We currently have 1,200 sites as at end-September and we are on track to reach 1,600 sites by the end of the year. This will enable us to provide better service quality to our customers,” Lai said.

According to the company, its capital expenditure to date is around RM500 million, while its remaining capital expenditure for the next 12 months is RM250 million.

Lai is upbeat about the agreement P1 sealed with Telekom Malaysia Bhd in October, which gave it access to the 1.3 million homes covered by the latter’s high-speed broadband (HSBB) backbone.

“We are planning the rollout of our HSBB services early next year. It will not only allow us the opportunity to offer high-end packages to our customers, but also to do a network offload for our more congested WiMAX sites,” said Lai.

Puan also said P1 hopes to be able to roll out its 4G offering by 2H12, adding that P1’s network is LTE/4G ready and could instantly roll out services once it receives spectrum allocation from the government. P1 is among nine companies in the running for a portion of the LTE/4G spectrum. The government is expected to announce its decision on winners and allocations early next year.