MediaToday
interview | Wednesday, 13 January 2010

Going tough

Charlot Zahra discusses with GO Chief Executive Officer (CEO) David Kay the telecoms company’s latest sporting rights’ acquisitions, the consolidation of the internet market and how the company is combating the tough economic recession, among other things

When GO took over Multiplus in 2007, it has only 8,000 subscribers. Now it has well over 44,000 subscribers and has reached nationwide coverage. How did GO manage to achieve this?
The increase in our TV customer base has been very constant and consistent. We believe that this is due to three main reasons: accessibility of service thanks to the investment in our digital state-of-the-art head end infrastructure and nationwide network coverage, the wide choice of content, and the overall value for money.

How crucial is GO TV to the entire business strategy of GO? Could you kindly elaborate more in this respect?
The TV service represents the new growth business for GO. With traditional fixed line telephony business in a managed decline, and the increasing competition in mobile and internet, we are seeing significant growth in the TV business, as more people upgrade to higher value packages with added content.

Recently GO TV managed to acquire the football rights for the two major foreign football leagues followed in Malta – the UK Premier League from 2010-2014 and the Italian Serie A from 2010-2012. How will the acquisition of these new rights position GO among sports enthusiasts?
This was a major coup for GO especially because many of TV customers have been waiting for this to happen before deciding to switch to GO.
Notwithstanding this, the achievement of 44,000 customers in less than 3 years was made without having the English Premier League and the Italian Serie A, which demonstrates the strength of GO’s TV proposition.
The new rights cover live TV coverage, as well as coverage on the internet and on mobile – and hence we intend exploiting this opportunity across all our services.
One has to point out also the fact that our intention is not only to strengthen our sports content offering, but also other content such as movies, in order to continuously satisfy the needs of our customers.
Lately we have exclusively launched two new channels FX and FoxLife. Other channels will be launched in the coming months.

GO also has the rights for the Formula One racing as well as the UK national team’s home and away football matches and the FA Cup. Do you now feel on equal footing to challenge Melita even on the sporting market or not? Why?
GO’s acquisition of the English and Italian football rights is consistent with the company’s policy to acquire quality programmes. We believe we have a very strong offering on sports for all current and prospective TV customers.
In fact, GO currently holds the rights for various sports including football, rugby, tennis, motor sports, golf, horseracing and boxing.
Coverage on the Sports+ channels include football club channels and events such as the English FA Cup and Community Shield, Formula 1 racing, Wimbledon, ATP Masters Series, Fed Cup, Davis Cup, Augusta Masters, US Open, PGA Open, British Open, Ryder Cup 2010, PGA European Tour, Tri Nations Rugby Cup, Guinness Premiership, Heineken Cup and EDF Energy Cup, amongst others.

Do you have any estimates by how much the subscriber base of GO TV rise as a result of the new sporting acquisitions? Could you kindly give an exact figure?
We are obviously a very strong competitor in the TV business and this year we plan to increase significantly our customer base mainly as a result of the latest TV sports acquisitions.
However, we were anticipating growth even without the English and Italian football, as there is a strong demand for our service – even as part of our four-service package – Home Pack.

Recently GO has also marketed a new set-top box that will also be able to record video in it. Could you kindly elaborate more on how this box will function?
The new set-top box, GO Box+, gives customers a new dimension to the TV experience. With its three main functions, viewers now have live TV under full control.
GO Box+ allows customers to pause and catch up with live programmes at the touch of a button so they will never again miss any of the action. GO Box+ allows also customers to rewind back and see it all again.
Moreover, customers can record their favourite shows with no need of cumbersome timers, tapes or discs thanks to the advanced Electronic Programming Guide (EPG). The response to this new set-top box has been very positive.

When will this new box be available for purchase? At what price?
It has been available since mid-December. One can trade in his leased standard GO set-top box for a GO Box+ for €199 or €10 a month for two years. Alternatively, one can lease GO Box+ without exchange of standard set-top box for €250 or €12 a month for two years.

Does this new set-top box enable GO Plus TV to offer pay-per-view events, for which there is a substantial demand in Malta, especially from people who cannot afford or even do not want to subscribe to all the teams in a particular competition?
It does not offer pay-per-view functionality.

In the broadband market, after Melita took over majority market shareholding in mid-2008, GO started fighting back through the acquisition of independent ISPs like Euroweb and BMIT, the second of which specialised in the corporate market sector. How successful has this strategy been in increasing GO’s market share in the broadband internet sector? Could you kindly elaborate more in this respect?
Lately we have also taken over the customer base of the ISP WebWaves. Our expansion in the internet business is also happening via these acquisitions, apart from new customer connections.
Clearly the market is consolidating and this seems to be an inevitable development.
In the case of BMIT, it is a different type of operation given that GO acquired a majority stake in the company which provides a variety of services including co-location, managed services as well as the provision of IP connectivity.

Over the past years, GO has talked about the development of fibre-to-the-home technology which would enable the company to deliver very high speeds. Is this project still on, or has it been shelved? Do you have any specific timelines for the development of this project? Could you kindly state which are those deadline?
GO continues to lay fibre in several localities in Malta so that customers can benefit from enhanced and higher broadband speeds. This is the result of an investment which strengthens the connectivity towards customers’ premises and which brings fibre-connection closer to the home or office.
For the last few years, fibre has been already deployed in several places, especially businesses, which require high speed throughput and bandwidth.
Such speeds and level of service can be provided also thanks to the investment we made in our second submarine fibre-optic cable link to Europe.

After first being wary of MVNOs, in the space of a few months there will be two MVNOs that are or will be using GO Mobile’s infrastructure. Could you kindly elaborate more on this decision? What led to this change in policy?
The market has developed and as a result GO opted to review its position on MVNOs. MTV Mobile is not an MVNO as it is a mobile service offered by GO branded under MTV, following our agreement with the brand owners.

Can the limited Maltese market support more than six mobile phone operators, especially in view of the reduction in spending power caused by the recession and other Government tariffs?
The market itself will determine whether it can support all operators. However, GO believes that the operators that will succeed are those that have the best technology, customer experience, reliability and who provide value for money.

How has GO weathered the financial recession that has hit Malta and the rest of the globe? How has the economic recession affected the company’s bottom line?
Like any other company, GO has been affected by the global recession. For instance, the reduction in tourism implies a lower roaming revenue potential. Clearly, telecoms remains an important expense item, and customers do look out for better deals.
And that is what happened in 2009 and will continue happening this year. We believe that with the right products, like Home Pack, at the right time, one can exploit opportunities that come along even in such times.

What effective measures has the company taken to withstand the shock provided by the economic recession in Malta?
We constantly look at optimising revenue lines, and create new ones – like the data centre business and TV.
GO has managed to retain and grow its customer connections base and now services well over 480,000 such connections. This is very positive especially in the light of the fact that customer loyalty in such times is an important factor.
Equally important is the curtailing of costs, at all levels, including head count and cost of sales.

Is the current headcount at the company right for the company in view of the competitive challenges facing GO, both locally and globally, or do you envisage a further reduction?
As a legacy company, GO’s major challenge was managing its cost structures and issues, particularly where its headcount was concerned, were being addressed aggressively.
A carefully managed and generous voluntary redundancy scheme allowed us to reduce our workforce by 450 employees in 2009. The company is meeting its headcount target of 1,150 by the end of 2009.

In your view, what would be the right headcount for the company right now?
We envisage further reduction in headcount so as to achieve the targeted 1,000 employee base.

Have you consulted the Unions before this decision was made? What has been the response of the Unions to GO’s decisions?
The unions have always been informed about our head-count reduction programmes.

Do you plan to issue more Voluntary Redundancy Schemes if the present ones are not taken up? Why do you plan to issue those?
No.

How has the recent default by one of a state-owned company in Dubai and the subsequent downgrading by the credit rating agencies of the rating of the parent company of GO’s main shareholder (Tecom) affect GO’s operations in Malta, especially when the company tries to raise capital for new investment?
This has had no impact on GO.

czahra@mediatoday.com.mt

 

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13 January 2010
ISSUE NO. 616

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