Tiscali 2014 Annual Report Download - page 69

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
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Annual Report as at 31
December 2014
69
As from 2009, the Group, after having completed the disposal of Tinet and the UK subsidiaries,
allocating the proceeds of the sale to the repayment of part of the debt, implemented action with the
aim of achieving economic, equity and financial balance over the long term, and launching a phase of
recovery for the sales activities, which has been reflected in the business and financial plan.
In a recessionary context, the transformation under way for some years in the telecommunications
market has led to greater competitiveness and erosion of the revenues and the margin for the
operators.
Progressive saturation for the fixed network broadband market, the sharp competition of the data
proposals on the mobile networks and the possibility for customers to migrate from one provider to
another has generated a greater response from the customers to promotions and consequently a
declining trend of the prices.
In the presence of such factors (and other collateral ones such as the progressive replacement of the
fixed lines with mobile ones, the increasing weight of the costs linked to customer service, the
establishment of the so-called Over-The-Top products), Tiscali, like the other telecommunications
companies, has rationalised its internal processes implementing rigorous cost cutting programmes to
preserve margins and maintain the competitive position, as well as to try and diversify its revenue
streams in web and Over-The-Top services.
During 2014, from an operational perspective and within a context involving competitive pressure in
the market of accesses from a fixed network, management continued to pursue the following:
 action aimed at reducing costs and rationalising the internal process for the purpose of
improving profitability;
 the strategy for control of the incoming customer base and debt collection. As at 31 December
2014, the customers using automatic payment methods reached around 67% of total
customers.
Highlights for the year 2014 reveal the following in particular:
 a drop in Group revenues of 4.7% with respect to the same figure in 2013, mainly attributable to
the decrease in Access revenues (-5.3%), and in particular the ADSL and VOIP component, in
turn linked - to a predominant extent - to the reduction of the ARPU caused by additional
promotions on the prices of services when compared with 2013, in an increasingly competitive
market context, and a slight drop in the customer base (-3.4%).
 an increase in the mobile telephone customer base (active and operating SIMs as at 31
December 2014 amounting to around 91,699, with average monthly growth of around 6,700
units);
 an increase of 5.4% in business-to-business revenues (VPN, housing, domains and leased
lines) compared with the previous year;
 focus on innovation through a new strategy for the development of web and Over-the-Top
services.
All the activities listed above made it possible to generate cash and cash equivalents from operating
activities for around EUR 34.1 million.
Furthermore, Tiscali took part in 2014 in the tender called by Consip S.p.A. (hereinafter also
“CONSIP”) for the supply of connectivity services in favour of the Public Administration Authorities
(“SPC2 Tender” or “Consip Tender”), and on 14 May 2014 turned out to be the company with the best
economic bid. In the following months, Tiscali’s bid was subject to close examination in terms of
suitability by the CONSIP awarding commission, an examination successfully passed as per the
communication dated 24 December 2014. On said date, CONSIP also invited the other bidders to
adapt their bid to the price list presented by Tiscali. As confirmed by the communication sent by