Tiscali 2001 Annual Report Download - page 33
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25
B2B
Business-to-business revenues, at 13% of the total, were up 231% on 2000. This was the
result of enlarged consolidation and a wider range of services, made possible by the
integration of national infrastructures into the Company's international backbone. As well
as, by the creation of dedicated corporate departments focused on the development of
B2B services.
Tiscali offers one of the most comprehensive ranges of B2B services on the market, from
broadband access through leased lines and XDSL to hosting, housing, VPN (Virtual Private
Networks), security solutions and streaming. Here too, the gross margin recorded steady
growth last year, standing at 46% of revenues in the first quarter and increasing to 49% in
the fourth.
Voice
Revenues from voice services fell 11% to EUR 54.4mn in 2001, and accounted for 9% of
total turnover.
These services, available only in France, Italy and the UK, consist mainly of B2B services,
pre-paid phone cards and voice/Internet packages.
To improve this business area's profitability, low-margin products were withdrawn, and as
a result the gross industrial margin, which had a negative value of -25% in the first quarter,
improved in the fourth to almost breakeven point, at -1%.
Operating costs
Operating costs totalled EUR 806.1mn, up 273% on 2000 following the changes in
corporate structure, which saw the Companies acquired during the year integrated into the
Group.
Direct costs increased on 2000 because of the enlarged user base and higher traffic
volumes generated. Line rental and traffic purchase costs were EUR 209.4mn and EUR
166.6mn respectively.
The aggregate gross margin rose from EUR 39.4mn (4% of total revenues) in 2000, to EUR
179mn (28%) in 2001, a jump of 354%. This growth, as already highlighted, was
attributable mainly to synergies created by the integration of the Companies acquired
during 2001 into the Group. These Companies generated 40% of the Group's gross
industrial margin in the last quarter.
Marketing and sales costs were EUR 118.4mn, or 19% of total revenues, an increase of
187% on 2000.
Tiscali has begun a brand unification process. A corporate brand marketing and product
advertising campaign is planned to increase brand recognition in Europe and maximise the
impact of Tiscali's advertising budget.
At December 31, 2001, staff costs totalled EUR 162.7mn (26% of revenues), an increase of
about 474% on 2000 as a consequence of increased headcounts following the acquisitions
Report on Operating Performance