Challenge and response
Despite challenging environment, the pace of decline decelerated in 3Q20 for Silknet. Although strict lockdown measures were lifted from late May, the absence of international tourists and certain restrictions for various businesses put pressure on telecom sector in Georgia. With recovery in economic activity and introduction of “unlimited data packages” in summer months, mobile data revenue jumped by 21.1% q/q in 3Q20, however this was insufficient to compensate losses in more traditional mobile revenue streams (SMS, mobile accessories) and fixed broadband income.
Silknet generated GEL 258.2mn (up 1.0% y/y, US$ 84.5mn) in commercial revenues in 9M20, reflecting strong performance in 1Q20 and slightly lower revenues in 2Q and 3Q (down 2.5% y/y and 2.1% y/y, respectively). On a positive note, Silknet maintained strong profitability metrics, earning GEL 156.9mn (US$ 51.3mn) in EBITDA in 9M20, translating into an impressive EBITDA margin of 55.4%. Notably, on the back of weaker revenue generation, the company’s profitability came under pressure during 3Q20, with EBITDA (incl. IFRS) down 7.8% y/y. Weaker GEL was the main reason behind the deterioration of Net-debt-to-EBITDA ratio, which jumped to 3.04x as of September 2020.
In November, Silknet issued Georgian Depositary Notes, which aim to enlarge the pool of fixed income investors in Georgia.
Please see the full report for detailed coverage of Silknet’s 9M20 performance.
