GO internet

MI: GO

€31.5m market cap

€1.6 last close

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.

Investment summary

GO recently attained its goal of raising €5.0m via a rights issue of 6.2m shares, enabling the group to pay the €2.7m 5G frequency extension fee to the Italian government ahead of its deadline. The group has announced a new deal with Linkem to use its network in Umbria and also 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, the €2.7m extension fee and the January 2019 share issue this values the frequencies at €2.61 per share. Our DCF values the stock at €1.39 per share.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2016A 6.4 3.0 0.5 34.0 4.7 N/A
2017A 6.6 2.8 (0.2) (12.0) N/A N/A
2018E 6.8 2.7 (0.7) (39.0) N/A N/A
2019E 7.9 3.1 (0.5) (32.0) N/A N/A
Last updated on 27/03/2019
Industry outlook

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.

Last updated on 27/03/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (€m) 2.4
Forecast gearing ratio (%) 22
Price performance
%
1m
3m
12m
Actual 32.8 64.8 21.0
Relative* 28.9 43.7 26.7
52-week high/low €1.8/€0.9
*% relative to local index
Key management
Giuseppe Colaiacovo Chairman
Alessandro Frizzoni CEO
Alessandro Ronchi FD
Flavio Ubaldi COO