Internet service provider M-Web is preparing for a second half with continued operating losses, as it applies its strategy of growing its subscriber base and content offerings.
The company announced its interim results on Sunday, its first figures after de-linking from MIH Holdings and transferring to the JSE`s industrial development stage sector in August.
Reporting a net loss of R133 million and a headline loss per share of 45.98c, operating loss amounted to R143 million. However, the company`s subscriber base has grown by 300% to 177 000. Revenue also saw positive growth with an increase of 130% to R92 million.
M-Web says it will continue to invest in growing its subscriber base, content offerings and e-commerce capabilities. In doing so, it will incur substantial losses similar to at least present levels, over the next financial year. The company believes that growth of this nature may create substantial shareholder value and is worth the considerable expenditure and risks involved.
An analyst says that M-Web will get away with its present operating losses only until the 2001 financial year, but after that it will need to show clear profit margins. Industry analysts calculate that M-Web is spending roughly R1 600 to gain a new customer and profiting by only R1 400 per new subscriber.
However, the analyst did say that M-Web does seem to be the Internet service provider market leader in SA and that the country can expect a surge in e-commerce, from which M-Web has positioned itself to benefit. As far as investors are concerned, the analyst still sees M-Web as a "good punt".
In July the M-Web and Internet Africa/24.com portals were re-designed and launched and combined page impressions are now in excess of 18 million per month. M-Web portals continue to create new content partnerships with content providers, which include Moneymax, McGregor BFA, 24.com and ITWeb.
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