KeyTech’s boosted its profits by more than $6 million during the six months to the end of September thanks to a one-off $10.5 million gain from the merger between M3 Wireless and CellularOne in May 2011.The telecommunications firm, which released its results yesterday, reported net income of $9.2 million over the period, up from $3.1 million over the same time last year.The one-off gain reflecting the fair value of 42 percent of assets in the merged company, in excess of the previous book value of M3 Wireless.A one-time impairment to the carrying value of Bermuda Telephone Company’s (BTC) rental telephone equipment and related inventory totaling $4.1 million was also included in expenses for the period.During the current six-month period the goodwill and intangible assets value of KeyTech’s Cayman telecommunications business totalling $3 million were impaired primarily due to lower residential revenues as the Cayman resident population contracted.Also included during the six months were $519,385 of staff separation costs compared to $2,984,999 in the prior period.Excluding those four items adjusted net income for the period was $6.3 million versus $6.1 million the year previous.“As anticipated, we have seen on-going economic challenges in our markets which have affected revenues,” said KeyTech CEO Sheila Lines. “We have reduced our operating costs to offset these revenue declines.“Notwithstanding current economic conditions we have continued to make major investments in fiber networks in Bermuda and Cayman to ensure our businesses are well placed to meet customer demands for reliable and higher data speeds. We will shortly be completing the rebuild of our Hamilton fibre network to a full Metro-Ethernet network for corporate customers and the fiber island-wide core network. Our next phase will be to extend the fiber reach to residences”.Operating revenues for the period were $45.5 million compared to $55.8 million for the six month period ending September 30th 2010, a decrease of $10.3 million, with $7.6 million of the decrease due to the effect of the accounting change post merger in May 2011 for M3 Wireless.M3 Wireless was consolidated as a subsidiary prior to the merger and post merger KeyTech recorded a share of the profits in CellOne.Of the remaining $2.8 million revenue reduction, $1.2 million related to reduced use of wireline voice services and $1.6 million in reduced software and hardware revenues reflecting the company’s strategic move from selling low margin hardware and software and focusing on recurring connectivity revenues.Total expenses decreased by $8.3 million including staff separation costs and the one-time impairment of BTC’s rental telephone assets and by $10 million excluding these costs. Of the underlying $10 million decrease $7 million reflected the deconsolidation of M3 Wireless in May and $2.9 million was the result of continued efforts to reduce expenses in the tough economic environment impacting revenues.“In the current period our primary focus has been on our core connectivity businesses, both in terms of substantial investment in fibre network assets, to enable new data products, and in terms of customer engagement,” said Ms Lines.“We have made efforts to retain and grow our customer base and where economic conditions allow, grow revenues. We continue to seek efficiencies in our operating business model to preserve share holder value and to ensure our cost base is competitive.”Of the CellOne merger, Ms Lines said: “We realistically assessed the industry trends and the market opportunities available to us, noting the challenges with growing revenue and increasing value while operating in a small geographic market served by three established providers. We determined that a merger with CellularOne would retain wireless diversification and best serve our shareholders .“The merged CellOne is performing well operationally and meeting our expectations.”Share of profits of affiliated companies for the six month period were $2 million compared to $1.5 million in the prior period, with Bermuda CableVision contributing profits of $1.6 million ($1.8 million in 2010), CellOne profits of $487,719 and QuoVadis a loss of $99,786 ($329,316 loss in 2010).“This initial period for CellOne includes merger expenses and does not reflect the full expected future cost synergies when the operational merger of the two companies is completed,” said Ms Lines. “We anticipate the full synergistic benefit on operating costs will commence in our next fiscal year.“QuoVadis digital certificate growth in Europe has been strong, offsetting reduced earnings from the Bermuda infrastructure business.”During the six month period, KeyTech invested $4.8 million in capital assets versus $6.6 million a year earlier.Earnings per share for the six-month period ended September 30, 2011 were 63 cents compared to 21 cents for the same period last year.Investment income and realised gains and losses from marketable securities for the period were $12,621 compared to $17,173 for the prior period. Income from non-controlling interests for the period was zero, compared to $87,548 for the same period last year.The company declared a dividend of 12 cents per share for the quarters ending June 30, 2011 and September 30, 2011.