GO internet provides fixed broadband internet and telephone services using 4G and 5G wireless technology in the Emilia-Romagna and Marche regions of Italy, where it has exclusive right of use for 42MHz in the 3.5GHz frequency band. In partnership with Enel Open Fiber, GO is developing a 1Gbps fibre-to-the-home service.
GO looks to be on track to raise up to €5.0m via its current rights issue of 6.2m shares. Network sharing partner Linkem has participated fully, paying in €1.1m and Go Internet has already paid the €2.7m frequency extension fee to the Italian government (due end January) which extends its 5G frequencies to end-2029. The group now plans to accelerate its 5G strategy to more rapidly roll out its high speed 5G and LTE services and shut WiMax by the end of 2020. The massive increase in service speeds should boost subscriber growth and reduce churn, improving earnings. Recent 5G frequency auctions in Italy resulted in much higher than expected sale prices of €1.69bn for frequencies in the 3.4-3.6GHz spectrum range. We calculate an implied value of €51m for GO’s 42MHz of 3.5GHz spectrum frequencies based on the agreement to extend to 2029. Adjusted for group debt and the €2.7m extension fee, this values the frequencies at €3.45 per share.
The Italian broadband market is relatively under-penetrated and with no cable alternative to incumbent TI, opportunities exist for niche providers. GO internet, with its low-cost wireless service, is targeting the one million ‘mobile-only’ homes in the Emilia-Romagna and Marche regions of Italy that are increasingly opting to relinquish their expensive fixed-line services.