Managed telecommunications group, the Huge Group reported a loss of R5,9-million in the first half of the 2010 financial year, compared with earnings of R28,8-million the year before.

The group noted that cellular airtime and other revenues had declined to R253-million in the six months ended August 31, 2009, compared with R262-million the year before.

The weighted average daily cellular airtime revenue fell by about R75 000 a day, leading to a R2,8-million reduction in gross profits, with the after-tax impact on earnings amounting to R2-million.

To counter this, the group planned to increase its focus on sales and widen its product and service offering in the next six months.

The timing patterns of mobile network contracts had reduced connection incentive bonuses by R13-million during the six months, resulting in an after-tax impact on earnings of R9,4-million.

The stock of airtime revenue on 6 000 unallocated subscriber identity module (SIM) cards of R11,5-million had been written off, with an impact on earnings amounting to R8,28-million.

The group had now allocated all 6 000 SIM cards to customers, which would increase billed revenues and reduce the amount of unused airtime that is written off, going forward, it highlighted.

However, the group’s operating costs had risen by R11,6-million during the six months, with R6,5-million of that being an increase in salary expenses.

Huge had also incurred R9,4-million of impairment charges on derivative contracts, saying that the total possible future exposure to these contracts would amount to R10,2-million.

Meanwhile, the group pointed out that its infrastructure had been upgraded during the past six months, a move that would positively contribute to the future success of the company.

The Huge group was “quietly optimistic” about its future prospects.

Revenue growth was expected to resume with greater impetus in the new financial year, the group noted, adding that it was hopeful of seeing the benefits of its recent restructuring in the last six months of the financial year.

The company continued to perform well at an operating level and has continued to maintain gross margins at acceptable levels, it stated.