Back on track

GO internet 4 April 2017 Update
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GO internet

Back on track

Full year results

Telecoms

4 April 2017

Price

€1.82

Market cap

€19m

Net debt (€m) at 31 December 2016

3.0

Shares in issue

10.6m

Free float

31%

Code

GO

Primary exchange

AIM Italia

Secondary exchange

NA

Share price performance

%

1m

3m

12m

Abs

6.0

21.9

36.1

Rel (local)

2.1

16.4

18.6

52-week high/low

€1.8

€1.1

Business description

GO internet provides fixed broadband internet and telephone services using fourth-generation (4G) wireless technology. The service is currently offered in the Emilia-Romagna and Marche regions of Italy, where GO has an exclusive right of use for 42MHz in the 3.5GHz frequency band. In partnership with Enel Open Fibre since Q117, it also offers a high-speed fibre to the home service (up to 1Gbps) in the city of Perugia (Umbria).

Next events

AGM

27 April 2017

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Anna Bossong

+44 (0)20 3077 5737

Katherine Thompson

+44 (0)20 3077 5730

Dan Ridsdale

+44 (0)20 3077 5729

GO internet is a research client of Edison Investment Research Limited

With funding in place, GO is stepping up the implementation of its network and we reduce FY17 EPS forecasts to capture this profile as well as the new €1.75m loan, but leave FY18 estimates largely unchanged. A pick-up in the pace of subscriber additions could trigger upside to our base case DCF of €2.8/share. In addition, with 3.5GHz now earmarked for 5G services, GO’s spectrum could be used for a wider service offering in the longer term and may put it in focus for operators looking to secure 5G capacity.

Year
end

Revenue (€m)

EBITDA*
(€m)

EPS*
(c)

EV/sales
(x)

EV/EBITDA (x)

P/E
(x)

12/15

5.3

2.0

3.8

4.3

11.0

47.2

12/16

6.4

2.5

3.7

3.5

8.8

49.7

12/17e

7.7

3.2

3.2

2.9

6.9

56.1

12/18e

9.6

4.5

8.2

2.3

4.9

22.1

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

FY16 results reflect slower roll-out of network

Despite the slower pace of network roll-out in 2016, GO continued to show steady financial progress. FY16 revenues of €6.4m increased in line with the subscriber base (+21%). EBITDA of €2.5m, while up 25%, was 11% lower than our forecast, reflecting the launch costs of the new fibre service in Perugia. Following last October’s €4m funding round, management took advantage of favourable terms before the year-end to acquire additional base stations. Consequently, despite the slowdown in installation of base station last year, capital expenditure increased 28% to €5.7m and net debt was €3.0m (vs €2.3m forecast).

Funding in place – network roll-out accelerated

GO has also secured an additional €1.75m loan and is now able to reaccelerate the rate at which it implements its 4G LTE wireless network. The additional funding will also enable it to widen the scope of its fibre service partnership with Enel, currently in Perugia, to other cities later in the year. We update forecasts to reflect the current capital expenditure profile, and incorporate the additional financing costs in our estimates, which leads to a reduction in our FY17 EBITDA and EPS forecasts of 7% and 26% respectively. We consider this an acceleration of plans, rather than an uplift, and consequently the impact on our FY18 forecasts is less pronounced (5% reduction to FY18 EPS).

Valuation: 5G adds options for GO’s 3.5GHz

The shares trade at a 35% discount to our base case DCF (€2.8/share versus €3.1/share before), which currently does not take into account potential valuation implications attached to GO’s exclusive ownership of 42MHxz of spectrum in the 3.5GHz band. With this band recently earmarked by the European regulators for 5G, the possibility for GO to monetise this spectrum more widely has become a question of when and how, rather than if. Hutchinson’s recent acquisition of UK peer (UK Broadband) also demonstrates that companies with access to this spectrum have become attractive to MNOs looking to secure 5G capacity.

FY16 results review

The lack of clarity over funding during the first nine months of 2016 (refer to our report Rights issue for accelerated network roll-out for more detail) meant that GO had to slow the pace at which it rolled out its network to conserve liquidity. Subscriber growth tends to track base station installations and, consequently, while subscriber numbers have continued to increase (as GO back-filled its existing capacity), net additions during 2016 of 6.4k were not as strong as in FY15 (8.4k). Nevertheless, the full year results show continued solid financial progress.

Revenues increased by 21% to €6.4m, in line with our forecast, tracking the 20% year-on-year increase in subscribers to 37,749 at the year end. EBITDA of €2.5m (40% margin – flat on the interim) was 11% below our estimates, which we attribute to a higher level of marketing spend in relation to the launch of the new fibre service in Perugia in partnership with Enel Open Fibre. At the operating level, this was offset by a lower than forecast depreciation charge (due to a slower roll-out of the network in H216) leaving operating profits of €0.7k (+25% y-o-y), broadly in line with our expectations. However, a slightly higher tax charge meant that net profit of €0.3m was slightly short of our forecast.

Following the €4.0m October 2016 capital raise, management is accelerating the roll-out of the network and has taken advantage of favourable terms offered by Huawei to purchase approximately €2m of base stations just before the year end. Consequently, capital expenditure of €5.7m was considerably above our estimate of €3.2m, as was the year-end net debt of €3.0m.

Exhibit 1: Summary FY16 results and forecasts, 000s

 

2015

2016e

2016 reported

Y-o-y change

diff to forecasts

2017e (new)

2018e
(new)

Total net subscribers

31,356

37,783

37,749

20%

0%

45,048

55,310

Net subscriber additions

8,356

6,427

6,393

-23%

-1%

7,265

10,261

Total revenues

5,144

6,369

6,380

21%

0%

7,689

9,640

Operating profit

587

710

732

25%

3%

836

1,611

Interest

(275)

(250)

(252)

-8%

1%

(340)

(340)

PBT

312

460

480

 

 

496

1,272

Tax

(8)

(100)

(164)

 

64%

(156)

(399)

Net income

304

360

316

4% 

-12% 

340

873

EBITDA

2,010

2,830

2,516

25%

-11%

3,193

4,483

EBITDA margin

39%

44%

40%

 

 

42%

47%

 

 

 

 

 

 

 

Working capital

35

(7)

2,130

 

 

1,131

618

Other

0

0

(26)

 

 

0

0

Capex

(4,476)

(3,232)

(5,716)

28%

77%

(4,500)

(4,118)

FCF

(2,714)

(759)

(1,512)

-44%

99%

(671)

244

Financing/other

8

(3,968)

(3,968)

 

0%

753

0

Net debt - closing

5,463

2,254

3,007

-45%

33%

3,678

3,434

of which cash

339

3,548

2,406

610%

-32%

1,815

339

Source: GO internet (historics), Edison Investment Research (forecasts)


Financing in place – network roll-out back on track

In October 2016, GO announced the successful completion of its 77-for-100 rights issue at 0.86 per share (raising €4.0m via issuing 4.6m shares in total). In addition, in January 2017 it secured an additional €1.75m loan from Banca Intesa.

With this funding in place, GO has the resources to reaccelerate the roll-out of its 4G LTE high-speed wireless broadband network, targeting approximately 100-120 new base station installations in FY17 (compared to c 30 installed in FY16).

Additionally, in July 2016 GO announced that it had partnered with Enel Open Fibre in Perugia to market its ultra-wideband, fibre-to-the-home network. The additional funds will also enable it to widen the scope of its marketing for the promotion of this high-speed wireline network. Take-up in the first few months has been encouraging and the offer will be extended to another city in Q217, potentially adding other cities in Italy as the year progresses.

Exhibit 2: Monthly net subscriber additions

Source: GO internet data

Forecasts revision: Accelerated investment & financing

We assume GO maintains a higher level of marketing spend in FY17 to support the new wireline services and a faster pace of deployment for its wireless network which leads to a reduction in our FY17 EBITDA forecast by 7%. The additional cost of financing the €1.75m loan leads to a reduction in our EPS forecast by 26% in FY17. We view the increase in capital expenditure as an acceleration of plans rather than an uplift and consequently we leave our FY18 forecasts largely unchanged at the operating level.

GO reported FY16 year-end net debt of €3.0m, with cash of €2.4m. Debt comprises two bank loans of approximately €2.3m (c 3.5% interest) repayable in annual instalments by 2019 and 2023 respectively, and sale and leaseback arrangements mainly with Huawei for €2.1m, the outstanding payments due on the licence acquisition for the Emilia-Romagna region of €0.3m (repayable in annual instalments to 2024) and other credit lines (€0.6m).

We are increasing our FY17 capital expenditure forecast from €4.0m to €4.5m, and again in FY18 from €3.4m to €4.1m. Despite this increase and the higher than forecast FY16 year-end debt level, we raise our FY17 forecast net debt by only 9% to €3.7m. GO’s strong relationship with Huawei has enabled it to secure favourable payment terms on the procurement of its base stations, which we expect to result in a significant working capital inflow in the current year. Provided this is the case, GO is adequately funded to execute a more aggressive roll-out plan in the forecast period, although it may seek to add to its facilities to provide additional flexibility in the event these payment terms are not repeated in for future equipment purchases.

Exhibit 3: Summary forecast changes, 000s

 

2016

2017e

2018e

 

Forecast

Reported

Difference

Old

New

Change

Old

New

Change

Subscribers

37,783 

37,749 

 

44,179 

45,048 

55,337 

55,310 

Revenues

6,369

6,380

(0%)

7,699

7,689

0%

9,675

9,640

0%

EBITDA

2,830

2,516

(11%)

3,423

3,193

(7%)

4,369

4,483

3%

Operating profit

 

 

 

 

 

 

PBT

460

480

4%

673

496

(26%)

1,333

1,272

(5%)

Net income (headline)

360

136

(62%)

462

340

(26%)

914

873

(5%)

EPS (normalised, diluted)

4.2

3.7

(12%)

4.4

3.2

(26%)

8.6

8.2

(5%)

 

 

 

 

 

 

Capex

(3,232)

(5,716)

77%

(3,999)

(4,500)

13%

(3,422)

(4,118)

20%

Net debt

2,340

3,007

28%

3,388

3,678

9%

4,522

3,434

(24%)

Source: Edison Investment Research

3.5GHz spectrum increasingly valuable in 5G

The commercialisation of its wireless network in the in the Marche and Emilia-Romagna regions of Italy is the primary driver of forecasts and underpins our base case DCF valuation of €2.8 per share (down from €3.1 following the reduction in our EBITDA forecast). Along with the pace of expansion of this wireless network, there are a number of other initiatives that could have a significant impact on GO’s valuation. In summary:

The success of its new partnership with Enel Open Fibre, which could be extended beyond Perugia to other cities in Italy.

The possibility of greatly enhancing the footprint of its wireless network by participating in spectrum tenders.

Option value associated with Spectrum ownership.

Since our last update it is the value of GO’s spectrum in a wider context that requires greater attention given wider developments in the industry. When GO first acquired its spectrum, there was little interest by the industry in the 3.5GHz frequencies and GO secured 42MHz of spectrum in this frequency band for a relatively low price. However, with the explosion of mobile data, the lower frequencies currently used by mobile service providers are rapidly becoming saturated and mobile operators are looking to higher frequencies to satisfy capacity demands as the industry moves towards the gigabit technologies offered in a 5G environment.

Intel, Qualcomm and Huawei have all started producing chipsets that support 3.5GHz frequency for tablet and smartphone reception, which are now being incorporated across a spectrum of equipment, including smartphones (Sony, Samsung and ZTE phones using Qualcomm Snapdragon 835 chipset are expected to be on the market in the coming months). Furthermore, regulators across Europe (Ofcom, ITU) have now identified three key bands that will enable 5G in Europe – 700MHz, 24.5-27.5Ghz and, critically for GO, 3.4-3.8GHz.

This opens up a number of new possibilities for GO longer term, from wholesaling its spectrum to telecoms operators, to potentially even adding its own mobile offering to its fixed wireless broadband services. It also makes GO a more attractive target for one of the larger operators looking to secure 5G spectrum.

Assessing the actual value of GO’s spectrum is at this stage highly speculative. However, there is an interesting reference case in the UK. Hutchinson 3’s UK arm recently acquired UK Broadband for €350m (£250m plus £50m deferred investment). At an implied value per subscriber of €23k (UK Broadband has only 15k subscribers, mainly in London), the acquisition is largely ascribed to its ownership of 208MHz of nationwide spectrum holdings between 3.5 and 3.7HGz range, giving a significant boost to 3UK’s capacity in this band. Hutchinson’s acquisition is a lower-risk and cheaper route to securing spectrum than relying on the spectrum auctions – scheduled for later in 2017 in the UK. Via UK Broadband, Hutchinson secures the spectrum for only 3c per MHz per population compared to the 43c it paid for its 800MHz of 4G spectrum in 2013. As a benchmark, this indicates a potential spectrum value of €8m (assuming the UK Broadband takeover value per MHz per population), up to €122m (using the price Hutchinson paid for its spectrum in 2013). This is in addition to the value of GO’s wireless subscriber network and installed base of 37.7k subscribers.

For GO, the question has now become how and when, rather than if it can leverage its frequencies beyond wireless broadband services with a mobile offer. Irrespective of its eventual commercial strategy, owning exclusive access to these frequencies in the valuable Marche and Emilia-Romagna regions in Italy has put GO on the map of mobile operators looking to secure capacity for 5G mobile services.

On the other hand, it complicates GO’s own plans to bid for additional 3.5GHz spectrum to widen its wireless footprint to other regions, as these auctions are likely to be hotly contended now. In early 2015, AGCOM announced its intention to release an additional 200MHz of spectrum in the 3.6GHz frequency band. The government was keen to add services in areas of the country that currently have poor or no reception (digital divide areas). The auctions, which have already been subject to delays (they were originally expected last year), are likely to be delayed further as the regulator reassesses its strategy in light of the 5G standards that are being recommended.

Valuation and investment case

With funding in place, GO is in a strong position to reaccelerate the deployment of its network, both within and beyond its existing regions. Our base case DCF valuation, which factors in our forecasts to FY18 followed by stable subscriber additions for a further five years (and assumes an 11.5% WACC and a 2% terminal growth rate), returns a valuation of €2.8 per share, 35% above the current share price. Investors should also consider the following:

GO is targeting the 1m homes in the Marche and Emilia-Romagna regions that have chosen to relinquish their fixed line and, with 38.6k subscribers as of February 2017, there is considerable headroom for growth. Management plans to double its network coverage in the next few years to 30% of homes and the introduction of the 100Mbps and soon 300Mbps service should further improve its competitive offering.

Enel’s entry to the fibre market in Italy is potentially very disruptive. We view GO’s recently announced agreement with Enel as a relatively low-risk route to extending its brand outside its current regions, potentially nationally in Italy. Even a fairly small degree of success nationwide could have a significant impact on GO’s overall financial position longer term.

5G spectrum option. As outlined above, the 3.5GHz frequency band has been identified within 5G standards, which adds commercial opportunities for GO internet in the longer term and puts it on the radar of larger operators that are likely to look to secure frequency for a 5G environment.

The pending spectrum auctions offer a further opportunity for GO to expand its footprint beyond its current regions. Given recent developments in 5G, GO is likely to face a more intense level of competition than we previously thought, which reduces its chance of securing frequency. However, the auctions will help to set a price for the value of the spectrum that GO currently holds.

Risks and sensitivities

GO competes with a number of much larger, well-funded operators. Our forecasts assume, a stable pricing environment and steady progression in subscribers. However, the market is highly competitive and GO needs to react to market trends.

While we do not consider our subscriber forecasts for the new Enel service to be aggressive (peaking at 200 new subscribers a month), they are fairly speculative. The financial impact could be significantly higher or lower than we assume.

Exhibit 4: Financial summary

€000s

2013

2014

2015

2016

2017e

2018e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

 

 

 

Revenue

 

 

2,645

3,899

5,285

6,380

7,689

9,640

Cost of Sales

 

 

(1,170)

(2,053)

(2,735)

(2,977)

(3,558)

(4,109)

Gross Profit

 

 

1,504

1,896

2,550

3,403

4,131

5,530

EBITDA

 

 

887

1,425

2,010

2,516

3,193

4,483

Operating Profit (before amort. and except.)

166

373

587

732

836

1,611

Intangible Amortisation

 

 

0

(50)

(86)

(120)

0

0

Exceptionals

 

 

(54)

(7)

(67)

(60)

0

0

Other

 

 

0

0

0

0

0

0

Operating Profit

 

 

111

316

434

552

836

1,611

Net Interest

 

 

(202)

(292)

(275)

(252)

(340)

(340)

Profit Before Tax (norm)

 

 

(36)

81

312

480

496

1,272

Profit Before Tax (FRS 3)

 

 

(90)

24

159

300

496

1,272

Tax

 

 

(10)

(48)

(8)

(164)

(156)

(399)

Profit After Tax (norm)

 

 

(46)

33

304

316

340

873

Profit After Tax (FRS 3)

 

 

(100)

(24)

151

136

340

873

Average Number of Shares Outstanding (m)

 

5.54

6.56

7.97

8.63

10.61

10.61

EPS - normalised (c)

 

 

(0.84)

0.50

3.82

3.66

3.21

8.23

EPS - normalised fully diluted (c)

 

 

(0.84)

0.50

3.82

3.66

3.21

8.23

EPS - (IFRS) (c)

 

 

(1.81)

(0.37)

1.90

1.58

3.21

8.23

Dividend per share (€)

 

 

0.00

0.00

0.00

0.00

0.00

0.00

Gross Margin (%)

 

 

56.2

48.0

48.2

53.3

53.7

57.4

EBITDA Margin (%)

 

 

33.2

36.1

38.0

39.4

41.5

46.5

Operating Margin (before GW and except.) (%)

 

6.2

9.4

11.1

11.5

10.9

16.7

BALANCE SHEET

Fixed Assets

 

 

6,536

8,117

11,158

14,729

16,872

18,118

Intangible Assets

 

 

2,404

2,465

2,767

2,979

2,938

2,578

Tangible Assets

 

 

4,132

5,652

8,391

11,750

13,934

15,540

Investments

 

 

0

0

0

0

0

0

Current Assets

 

 

2,023

6,527

4,330

4,526

3,822

2,228

Stocks

 

 

166

814

967

814

830

830

Debtors

 

 

1,729

3,429

2,729

1,307

1,176

1,059

Cash

 

 

128

2,284

338

2,405

1,815

339

Other

 

 

0

0

296

0

0

0

Current Liabilities

 

 

(3,065)

(5,093)

(7,835)

(7,758)

(8,775)

(6,636)

Creditors

 

 

(1,384)

(3,839)

(5,034)

(5,998)

(7,015)

(4,876)

Short term borrowings

 

 

(1,681)

(1,254)

(2,801)

(1,760)

(1,760)

(1,760)

Long Term Liabilities

 

 

(4,515)

(3,911)

(3,000)

(3,000)

(3,080)

(1,360)

Long term borrowings

 

 

(4,368)

(3,771)

(3,000)

(3,000)

(3,080)

(1,360)

Other long term liabilities

 

 

(147)

(140)

0

0

0

0

Net Assets

 

 

979

5,640

4,653

8,497

8,838

12,350

CASH FLOW

Operating Cash Flow

 

 

1,297

1,842

2,045

4,646

4,324

5,101

Net Interest

 

 

(202)

(292)

(275)

(252)

(340)

(340)

Tax

 

 

(10)

(48)

(8)

(164)

(156)

(399)

Capex

 

 

(1,844)

(2,670)

(4,476)

(5,716)

(4,500)

(4,118)

Acquisitions/disposals

 

 

0

0

0

0

0

0

Financing

 

 

0

4,324

0

3,968

0

0

Dividends

 

 

0

0

0

0

0

0

Other

 

 

(29)

6

(8)

(26)

0

0

Net Cash Flow

 

 

(788)

3,162

(2,722)

2,456

(671)

244

Opening net debt/(cash)

 

 

5,152

5,921

2,741

5,463

3,007

3,678

HP finance leases initiated

 

 

0

0

0

0

0

0

Other

 

 

19

18

0

0

0

0

Closing net debt/(cash)

 

 

5,921

2,741

5,463

3,007

3,678

3,434

Source: GO internet (historics), Edison Investment Research (forecasts)

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DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GO internet and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GO internet and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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