A golden age for GO plc

The AGM season is now in its final stages for the majority of companies whose equity is listed on the Malta Stock Exchange. Apart from the customary resolutions generally placed on the agenda for shareholder approval, the annual meeting with shareholders is a good opportunity for a company to explain its business model as well as recent achievements and industry developments. Most companies also provide a detailed insight into their financial performance while a few also delve into the outlook for the current financial year.

Among the meetings held last week, the one of GO plc was a very interesting one since it coincided with the 50^th anniversary of the start of operations of Malta’s longest-standing communications provider following the enactment of the ‘The Telemalta Corporation Act of 1974’.

The meeting commenced with an interesting video to commemorate this milestone showing all the achievements over the years and highlighting the important role of the company to Malta’s economy. The video featured a number of short interviews with some of the main leaders of the company over the years. Among the statements made, a particular one struck me.

Deepak Padmanabhan, who served as GO’s Chairman from 2009 until 2016 and is currently a non-executive director of the company, described the present situation as a “golden age for GO”. On his part, the current CEO Nikhil Patil emphasised that “GO is actively moving beyond telecoms”.

Following the airing of the video to those present, Mr Patil delivered a short address in which he explained how the company evolved especially following several investments over recent years across a number of companies namely Connected Care, Sens, Cybersift, AQS and also Klikk.

The CEO explained that GO has become “a catalyst for Malta’s digital and sustainable future. From a company built on voice, we’ve grown into a powerhouse of true fibre, 5G, cloud, cybersecurity, digital devices and green energy – touching the lives of hundreds of thousands of customers, every single day”.

Mr Patil emphasised that in 2024, GO regained its leadership in the broadband market in Malta with 112,500 customers representing a market share of 46.8 per cent. Meanwhile, the CEO claimed that in Cyprus, their subsidiary Cablenet Communications System Limited in which GO holds 70.6 per cent, “is growing fast, expanding fibre and mobile reach, and doubling its operating profit”. Finally, the CEO also noted that GO’s other subsidiary BMIT Technologies plc is “reinforcing its leadership in digital infrastructure and cybersecurity and setting its sights on international expansion”.

Mr Patil concluded his intervention by claiming that “GO has a unique opportunity to expand beyond connectivity and into the wider digital ecosystem. By continuously innovating and bringing new digital solutions to our customers – along with the energy required to run them – we can capture a larger share of their digital spend”.

On his part, GO’s CFO Reuben Attard delved into the key financial highlights of the group showing record revenue during 2024 of €244.3 million (+3.8 per cent over the previous year), earnings before interest, tax, depreciation and amortisation (EBITDA) of €90.6 million (+2.4 per cent) and a net profit attributable to shareholders in line with the previous year of €14.5 million. This translates into a remarkable return on average equity of 17.0 per cent.

The CFO also highlighted the strong dividend distribution over the years by stating that dividends to shareholders amounted to over €154 million over the past seven years and almost €225 million over the last decade.

Mr Attard provided guidance to those present on some expectations for the years ahead by explaining that GO invested heavily over the last six years in the fibre roll-out across Malta, 5G and their own IT systems. The CFO indicated that the level of capital expenditure will start to reduce in 2025 following the finalisation of the fibre roll-out and this will accelerate in the years ahead.

The lower level of capital expenditure will result in growing free cash flows leading to sustainable and meaningful shareholder returns also in the years ahead. Mr Attard also made reference to the financial strength of the group with a net debt to EBITDA multiple of only 2.3 times indicating the ability of the group to repay all its debt in less than two-and-a-half years.

The CFO also confirmed that following the initial disposal of a minority stake in a company forming part of the portfolio of GO Ventures, others are also taking place leading to a crystallisation of good returns from these investments.

In response to questions from the floor, CEO Nikhil Patil confirmed that the company is exploring the possibility of a share buy-back. The CEO claimed that it would be a “great idea since the company is doing very well and the share price is low”.

Unfortunately, neither the CEO nor the CFO provided proper coverage to what I believe were important changes to the company’s memorandum and articles of association that were proposed and also approved. In the detailed circular sent to shareholders ahead of the AGM, the explanatory note to the proposed changed confirmed that the amendment will enable the company to engage in a broader range of activities including acting as a tied insurance intermediary and providing services relating to renewable energy installations, electric vehicle charging, and home automation.

The circular also delved deeper by confirming that the amendment enhances the company’s long-term sustainability by enabling it to further diversify its operations and explore new lines of business which positions GO in a favourable position for “future oriented growth and innovation”.

During the final part of the AGM, the CEO confirmed that the company will be eventually announcing that it will be acting as a tied insurance intermediary for the sale of home insurance to its customers.

Moreover, Mr Patil also acknowledged the need for a great focus on investor relations and to this effect, GO will be replicating the strategy of a few other companies listed on the MSE by providing quarterly highlights on the business performance to engage more frequently with all stakeholders.

It was evident again during last week’s AGM that the hard work by the management team and the strong financial position of the group is not truly appreciated by the investing public. The CEO also defined GO as a “beautiful company that keeps growing and paying dividends”. Like several other companies on the MSE, GO needs to devise a well-structured investor relations programme in order to ensure that all stakeholders within the capital markets understand the strategic direction being undertaken and appreciate the fundamental strengths of the group.

Read more of Mr Rizzo’s insights at Rizzo Farrugia (Stockbrokers).

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