TO OUR VALUED SHAREHOLDERS,
The year 2010 was an important one for your Company, which realized gains on its investment in Eastern Telecommunications Philippines, Inc. (“ETPI”), and made another important investment in Acentic GmbH.
On December 30, 2010, your Company sold 100% of its equity interest in AGN Philippines, Inc. (“AGNP”) to Vega Telecom, Inc., a domestic company owned and controlled by San Miguel Corp., for the amount of P1.6 billion. AGNP was the vehicle through which your Company owned 40% of ETPI. Consequently, your Company’s equity interest in ETPI has been reduced to 37.7% from 77.7%. Gain on this sale recognized in profit amounted to P269 million.
As a result of this, AGNP and ETPI 2010 financial statements were deconsolidated in the Group’s 2010 financial statements.
Earlier last year, in January 2010, your Company and PhilWeb Corporation invested equally in a Hong Kong-based company, Host Union International Limited (“Host Union”). Host Union, in turn, spent €19.5 million (approximately P1.3 billion) to purchase 65% of Acentic GmbH (“Acentic”), a limited liability company registered in Germany but headquartered in the United Kingdom and engaged in the business of providing in-room simple internet connection and fully integrates all guest entertainment services to the hotel industry devices and content, increasing revenue potential. specifically in Europe with almost 150,000 rooms. Acentic Horizon is already installed in various under contract.
Following the acquisition of this stake, we implemented focused changes in Acentic’s organization during the course of 2010. Richard Robinson, who had been an executive director of Acentic since its founding in 2003, was asked to step up to the position of Chief Executive Officer in July. Mr. Robinson was previously Chief Operating Officer for Acentic’s UK operations. He had delivered major contract wins and was instrumental in Acentic’s strategic planning process, with direct responsibility for overall business performance of three international territories. At a group level, Mr. Robinson was responsible for the overall guest proposition, as well as acquisition and merchandising of all content. During his tenure, Acentic saw a fourfold increase in sales volumes, with a 40% market share.
In July 2010, Acentic launched Horizon, its new High-Speed Internet Access (“HSIA”) solution for the hotel industry. The Acentic Horizon broadband solution, combined with Acentic’s Panorama® and Vision iTV systems, provides a bridge to the most flexible converged content strategy available for hoteliers. Acentic Horizon is a proven all-in-one solution that goes beyond a simple internet connection and fully integrates all devices and content, increasing revenue potential. Acentic Horizon is already installed in various hotel groups thoughout Europe, including Adina Hotels, InterContinental Hotels Group, Starwood Hotels Group, Marriott Hotels Group, Best Western Hotels Group and Maritim Group. In 2010, Acentic was able to install an additional 1,057 HSIA rooms, ending the year with a total of 22,559 HSIA rooms.
With the sale of the ETPI stake, ISM ended 2010 with cash and receivables of over P3 billion. Thus, in 2011, we shall be aggressively seeking new profitable ventures for ISM.
We have high hopes for a successful outcome in 2011, and we would like to thank you for your continued trust in your Company, ISM Communications Corporation.