MUMBAI: Radio satellite service provider Worldspace has reported its financial and operating results for the fourth quarter and year ended 31 December, 2005.
It finished the year with 115,306 subscribers. The company added 40,235 subscribers in the fourth quarter of 2005, an increase of approximately 160 per cent over the 15,545 subscribers added in fourth quarter of 2004.
In India, the company had 74,574 subscribers at the end of the fourth quarter of 2005, up over 100 per cent from 35,670 at the end of the third quarter of 2005 and up nearly 800 per cent from 8,335 at the start of the year.
At the end of the fourth quarter of 2005, WorldSpace had rolled out its satellite radio services in nine cities in India — Mumbai, Delhi, Bangalore, Chennai, Hyderabad, Kochi, Pune, Ahmedabad and Chandigarh.
Service in Kolkata, India’s second largest city, was launched in February 2006. Worldspace’s market distribution is now available to a population of nearly 63 million, including nearly 35 million people in the top three economic segments targeted by the company.
Worldspace chairman and CEO Noah Samara says, “Worldspace made important progress against all of our key operational metrics during the fourth quarter of 2005, especially in delivering strong subscriber growth. We believe we have gained significant traction in our efforts to acquire new subscribers, and will continue to do so as our visibility and brand awareness grow with the roll-out of our service to additional metropolitan areas, supported by targeted marketing campaigns. We also have made great strides in building our senior management teams, internationally and at the corporate level, by adding quality people with key areas of expertise that will be critical to our forward momentum.”
The firm introduced 19 new programming channels, including the first India sports talk radio channel and many regional language channels in India, as well as the world’s first global hip hop channel, bringing the total number of channels broadcast on WorldSpace’s global system to 220 by the end of the year.
It also completed an initial public offering (IPO) in August 2005, raising net proceeds of approximately $221 million; It raised strategic capital from and formed a technology sharing partnership with XM Satellite Radio in July 2005, including an investment of $25 million by XM Satellite Radio.
Also, three-year warrants valued at $37.5 million were issued to XM Satellite Radio exercisable at the IPO price provided XM has made substantial technological contributions to WorldSpace, including in the areas of products, chipsets and terrestrial repeater development and deployment;
The firm continued the expansion of the distribution and geographic presence in India, with over 650 retail points of presence in nine cities at the end of the year covering approximately 30 million people in Worldspace’s target market segment of the India population; It managed to obtain terrestrial repeater licenses in United Arab Emirates and Bahrain, the first L-band terrestrial repeater licenses for satellite radio.
Samara adds, “2006 is a pivotal year for WorldSpace.
We are working hard to gain key regulatory approvals for the delivery of mobile services in certain of our markets, and to increase the variety of our receivers.
We are moving into more cities in India and we are gaining strength in other countries where subscribers can be added at little incremental cost. We started the year well with the FCC’s approval of our license application for our Afristar-2 satellite, which when launched, will enable us to broaden our offerings in Europe and the Middle East.”
For the fourth quarter of 2005, WorldSpace reported quarterly revenues of approximately $4.4 million, representing a 95 per cent increase compared with revenues of approximately $2.3 million for the fourth quarter of 2004. Subscription revenue increased approximately 160 per cent to approximately $1.1 million for the fourth quarter of 2005 compared with subscription revenue of approximately $0.4 million for the fourth quarter of 2004. On an annual basis, total revenues for 2005 were $11.7 million in 2005, a 36 per cent increase over 2004 total revenues of $8.6 million. Subscription revenue in 2005 was $3.7 million, a 255 per cent increase over $1.0 million in 2004.
Worldspace recorded a net loss for the fourth quarter 2005 of $33.2 million compared with a net loss of $418.2 million for the fourth quarter of 2004, a period that included stock compensation expenses and other costs associated with an inter-company consolidation and subsequent debt restructuring.
For the year, the company’s net loss was $79.9 million compared to a net loss of $577.4 million in 2004. In the fourth quarter of 2005, WorldSpace spent approximately $9.6 million on sales, marketing and subscriber acquisition expenses globally, including $8 million in India compared with $4.9 million and $4.1 million respectively in the third quarter of 2005.
