BMIT Technologies Group registered €3.9 million in pre-tax profit during the first six months of 2024 (H1 2024), a 5.3 per cent decrease from the €4.2 million recorded in the same period last year (H1 2023), as it initiated its new cell tower operations.

The results were published on Tuesday in its interim report for the six months ended 30th June 2024.

BMIT Technologies Group is made up of BMIT Technologies plc, BM IT Limited, BM Support Services Limited, and Bellnet Limited. It provides customers with data centre and hosting services, public, private and hybrid cloud services, as well as managed IT services.

During the reporting period, BMIT registered a 12.8 per cent rise in revenue, going up to €16.7 million from H1 2023’s €14.8 million. Revenue from data centre, cloud and managed services remained consistent at €14.8 million.

The increase in annual revenue was attributed to its new cell tower operations, after it started acquiring revenue from the fees received from GO plc.

During 2023, BMIT acquired the 278 sites that make up GO’s passive telecoms assets, necessary for the telecoms company to function, for a total figure of €46.6 million. BMIT is now responsible for maintaining the cell towers and providing GO with hosting and co-location services for an initial 30-year period.

The opening six months of 2024 marked a “transitional phase” for BMIT during which it started taking control of the towers, manging the maintenance of the sites and directly engaging with the site owners. This period was focused on integrating this new line of operations within the group and amalgamating it with its existing operations.

In H1 2024, tower operations contributed €2 million to revenue, accounting for 11.8 per cent of the group’s overall revenue.

BMIT stated that in line with recent trends, the demand for cloud services has continued to increase, putting pressure on the group’s profitability margins since these services offer lower margins of returns than its traditional data centre business.

“Cloud services operate on a distinct cost and pricing model compared to data centre services. Data centre offerings necessitate a substantial initial investment but in return deliver stronger profit margins and typically involve longer-term commitments of over a year. Cloud services, in contrast, follow a subscription-based model that requires little to no upfront cost,” BMIT said.

Cost of sales for H1 2024 amounted to €9.8 million, a substantial increase from the €8.7 million registered in the same period in 2023.

During the reporting period, administrative expenses also increased by 14.1 per cent to €2.1 million (H1 2023: €1.9 million).

Starting from 2024, the group’s operating expenses also include the rental fees of the sites hosting the cell towers, thus accounting for the year-on-year change in costs.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) reached €6.6 million, an increase from the €5.2 million registered in H1 2023. This 27.1 per cent growth was largely attributed to the performance of the cell towers operations, which is starting to yield returns on the investment made.

As at the end of the reporting period, BMIT’s total assets amounted to €74 million, a contract from the €80.7 million registered at the end of 2023. €64.5 million of the group’s assets in H1 2024 were non-current in nature.

BMIT stated that its performance during the financial year has been marked by “continued changes in the market,” driven by technological advancements and economic realities. “The sustained adoption of cloud services also continues to put pressure on our traditional data centre services,” it said.

Despite the changes to its profit margins, BMIT outlined that these challenges present new opportunities for growth, including the implementation of a new long-term strategy, initiated by the cell towers acquisition.

BMIT also stated that during H1 2024, it started an evaluation of different opportunities related to expanding its business “within and beyond Malta.”