GO Group’s revenue exceeds €200 million

With the annual reporting season in Malta coming to an end over the next two weeks, several company announcements will be published in the days ahead providing important updates to the investing public on the extent of the post-pandemic recovery being experienced by a number of companies.

Meanwhile, last week, the GO Group (including GO plc, BMIT Technologies plc and Cablenet Communication Systems plc) held an online meeting with financial analysts to provide further insight into the 2022 financial performance following the publication of the GO plc Annual Report on 15 March.

For the first time on record, the GO Group’s consolidated revenue surpassed the €200 million level. In fact, Group revenue increased by 10.8 per cent over the previous year to an all-time high of €214.6 million, resulting in earnings before interest, tax, depreciation and amortisation (EBITDA) of €81.4 million (+€8.2 million or +11.1 per cent). GO’s CEO Mr Nikhil Patil commented that the 2022 financial performance is the culmination of the various initiatives taken over recent years.

The improved revenue generation came about from a very satisfactory growth in the subscriber base in Malta as well as in Cyprus. In Malta, GO’s telecommunications revenue increased by €4.6 million to €128.9 million driven by an overall increase of 8.2 per cent in subscribers. In the fixed broadband segment, GO reported an additional 3,900 connections (+3.7 per cent) to 107,700 subscribers with stronger growth in the mobile segment as the mobile post-paid customer base grew by 11,700 connections (+13.3 per cent) to 99,700 subscribers. The latter initiative was part of a strategic push by the company in view of the high Average Revenue per User (ARPU) as opposed to pre-paid mobile customers.

In Cyprus, Cablenet registered strong revenue growth of 19.4 per cent to €63.9 million reflecting an approximate 40 per cent growth in its subscriber base most notably in mobile telephony which saw a 102 per cent growth in its mobile subscriber base to 93,000 subscribers. In fact, Cablenet’s CEO Mr Yiannos Michaelides highlighted that the company was the fastest growing telephony operator in the Cypriot market last year. During 2022, GO acquired a further 6.84 per cent stake in Cablenet, bringing its total shareholding to 70.22 per cent.

With respect to BMIT Technologies plc, the company had a more subdued performance with marginal revenue growth of 1.9 per cent to €25.8 million. Most notably, in the Annual Report, GO’s CEO states that BMIT “embarked on a process of transformation, which will help it re-align its services and offerings, will distinguish it as the go-to advisory and cybersecurity experts, in addition to its core business”. In this respect, more recently both GO and BMIT announced that they are in discussion regarding “the potential assignment and transfer of certain lease rights and obligations” as well as “the passive infrastructure used for hosting telecommunications equipment”. During last week’s meeting, BMIT’s CEO Ing Christian Sammut acknowledged that BMIT is “looking at new areas of business to maximise the company’s expertise of being a strong infrastructure provider”.

Overall, the GO Group reported a pre-tax profit of €22.1 million representing a growth of 23.4 per cent from the comparable figure of €17.9 million posted in 2021.

On a post-tax basis, the net profit attributable to shareholders of €11.6 million (2021: €9.91 million) translates into a return on average equity of 12.2 per cent (2021: 9.33 per cent).

GO has been one of the most consistent dividend-payers over recent years and maintained a distribution to shareholders also in the midst of the pandemic. In summer 2021, the company reinstated its policy of semi-annual dividend distributions. This continued last year with the payment of a net interim dividend of €0.06 per share (2021: €0.07) in August 2022. Last month, the company announced that during the upcoming Annual General Meeting it will be recommending the payment of an unchanged final net dividend of €0.09 per share. As such, the total net dividend for the 2022 financial year is of €0.15 per share (which is 6.3 per cent lower than the previous year).

While Cablenet in Cyprus is in a different phase of growth and will require additional shareholder support to fund its heavy capital expenditure plan to accelerate its ambitious plans, the situation is very different in Malta as the company is approaching the tail-end of the investment programme in the fibre-to-the-home (FTTH) rollout as well as the 5G network. This will eventually lead to a lower level of normalised annual capital expenditure requirements thereby ensuring that GO can continue to maintain the regular dividend distributions to shareholders. The sustainability of the dividend must also be seen within the context of a strong balance sheet with a net debt to EBITDA multiple of only 2 times and the benefit of having a large proportion of Group debt in fixed-rate borrowings.

Although in Malta GO expects this year to be more challenging than 2022, the company still envisages to achieve further growth in core telecom services revenue as well as sale of mobile devices and business-to-business technical solutions. In Cyprus, Cablenet expects to continue to register double-digit growth in overall revenue and total subscribers despite the intense competition in the telecoms sector.

The local investor community is undoubtedly still reeling from the serious setbacks suffered over the past three-and-a-half years. So far, the annual reporting season has provided ample evidence of the strong post-pandemic recovery and continued strengthening of the fundamentals across a number of companies. The GO Group’s financial performance should be well-received by investors who need to recognise the fact that with the help of the significant investments made over the years, the Group is in a strong strategic position within an ever-changing and competitive global telecom industry.

While the continued progress achieved by a number of companies is the key element for the equity market to finally put the recent setbacks in the history books, the continuous communication by the larger companies could be important catalysts necessary to enable investors to regain the confidence and appetite for equity investments once again. This should instigate all companies to also publish their financial key performance indicators for the first quarter of the year and provide ample details even during the upcoming Annual General Meetings.

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

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