Tight Times Continue at 1worldspace
1worldspace — the Maryland company formerly called Worldspace — posted a net loss for the second quarter of $36 million, compared with a net loss of $51.2 million a year ago.
“Our goals moving forward in 2008 continue to be the resolution of our financial situation and a focus on our plans to bring mobile satellite radio services to Europe, starting with Italy sometime next year,” stated Noah A. Samara, the chairman and CEO.
“We have also drastically reined in spending in India, pending the attainment of the license for repeaters and a local equity partner relationship there, as we continue to work very hard to solve our liquidity issues.”
It has worked out a series of agreements with its debt holders to defer payments. In late July, it also received a $20 million infusion from a separate company controlled by Samara, of which $18.5 million was used to meet its debts. His company has provided financing in the past as well.
But 1worldspace this week also told the Securities and Exchange Commission that while it continues to be a going concern, its cash balances “are critically low” and noted it had incurred net losses of $72.8 million for the six months ending June 30 and an accumulated deficit of $2.6 billion.
“Because of our current liquidity situation we have not been able to make and have had to delay payments to many of our critical vendors and our employees,” it stated in the filing.
“In view of lack of financial resources ... the company has severely curtailed its operational and capital expenditures and is expected to do so until there is a material change in its financial resources,” it said; it continues to be in discussions to raise funds.
The satellite company hopes to develop its business in Europe, beginning with Italy; it has also been working to secure terrestrial repeater licenses in additional markets in Europe.
In May it tried to obtain terrestrial spectrum in the United Kingdom in the L-Band, but was not successful at the auction and now hopes to lease some of that from the winner. It has limited the operations and marketing of its services in India to a non-mobile subscriber base.
The company also continues to deal with a group of securities class action suits claiming that customers were incorrectly counted as subscribers after they had ceased to be paying subscribers. Last month the court denied a motion to dismiss the complaint; 1worldspace said it is planning to defend against the claims vigorously.
1worldspace brought in revenues of $3.3 million in the latest quarter, up slightly from earlier this year but down from the period a year ago. Subscription revenue was $1.8 million for the quarter. As of mid-year it had 171,000 subscribers worldwide; of those, 164,000 are in India.
The company reported an EBITDA loss of $15.2 million for the quarter, compared with an EBITDA loss of $27 million a year ago.