Filtronic to benefit from network upgrades

MOBILE phone technology group Filtronic said its wireless business is gathering momentum as mobile phone operators upgrade over-burdened networks.

However, the Shipley-based group’s loss-making streak continued due to a big customer being bought out by a rival and costs of growing its wireless business.

Filtronic posted operating losses of £1.2m for the six months to the end of November, down significantly on the prior six months when losses totalled £4.4m. Revenues grew to £10.5m from £8.2m.

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“The key trend we’re seeing is the growth of mobile data,” said chief executive Hemant Mardia. “This is basically being driven by smartphone use and mobile internet access. We’re seeing an expectation of 15 times growth in mobile data traffic by 2016.

“There’s really no alternative to upgrading their networks. It’s not an ‘if’, it’s a ‘when’.”

Filtronic said its wireless arm, bought for £10.7m in cash and shares in November 2010, grew revenues 66 per cent compared with its first six months of ownership. They surged to £5.2m from £3.1m six months earlier but the division contributed losses of £419,000 for the period.

The division helps mobile phone operators upgrade base stations to cope with greater data volumes. Dr Mardia said the US, an “early adopter” of this technology, is already seeing a “data crunch”, where networks do not have enough capacity to transmit mobile data.

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Filtronic’s wireless technology allows operators to “use existing infrastructure”, he added, and “delays the time when they have to put in completely new kit”.

The division targets a $500m market and now has eight customers, up from two when Filtronic bought the business.

Filtronic said timing on wireless orders remains “sensitive”, but it expects to make further progress.

At a pre-tax level Filtronic’s pre-tax losses of £2.4m for the period were double the £1.2m losses seen during the same period in 2010. This included a £1.2m non-cash amortisation charge.

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The group had cash of £3.9m at the end of November, roughly level with six months earlier.

Dr Mardia said Filtronic is recruiting again after a tough spell, and plans to hire about six more staff in Yorkshire and the US. It employs about 160 in total, with 20 in Shipley. Last January Filtronic warned on sales and profits after its biggest point-to-point customer Nera Networks was bought by rival Ceragon Network.

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