Telecom companies have been strategically important to keep economies and societies going during the pandemic and the ensuing lockdowns. In reality, the COVID-19 pandemic triggered major changes in the use of electronic communication networks and services across the globe.

Inevitably, working from home, home schooling and streaming entertainment services have resulted in a substantial rise in data usage on fixed networks during 2020. More specifically, this pandemic has deepened reliance on services offered by such telecom companies, whereby the security and resilience of electronic communication networks have played a key role in enabling the rapid transition of work from physical offices to digital platforms.

More interestingly, notwithstanding the fact that the pandemic had no material impact on the telecom industry in general, most telecom companies’ recently reported lower roaming fees due to travel restrictions imposed by the relevant health authorities’ in a robust attempt to contain the virus spread.

On the local front, GO plc (GO) issued its 2020 annual results earlier this month, whereby it reported circa €185.2m in revenues, representing an increase of €7.4m or 4.2 per cent on a comparative basis. Revenue specifically related to the Group’s local telecommunications segment, suffered a marginal decline of 0.9 per cent when compared to 2019, with management attributing this decrease mainly to a drop in international roaming traffic experienced throughout the pandemic.

Management further reported that the demand for fixed telecommunication services in Malta continued to increase during the pandemic with more people upgrading to broadband services with higher speed. As confirmed by the latest quarterly review report published by the Malta Communications Authority, GO achieved the highest net adds in broadband with 58.2 per cent of total market growth.

Moreover, Cablenet Communication Systems plc, being one of GO’s subsidiaries and a quad-play telecom service provider in Cyprus, generated total revenues of €47m, signifying an overall improvement of 17.9 per cent over 2019 and an increase of 8 per cent over IPO projections. Indeed, this revenue growth reflects subscriber gains across all the company’s business segments.

Additionally, BMIT Technologies plc, which is another subsidiary within the GO Group, also reported a positive financial performance for 2020, with total revenues amounting to approximately €24m (2019: €22.4m). As per direction provided by management, BMIT’s revenue growth is attributable to growth derived from its data centre and connectivity services.

Moving on to the expenditure side, Group cost of sales and administrative costs amounted to €165m, representing an increase of circa €10.7m over 2019. This upsurge in expenses is mainly attributable to an increase in employee benefit expenses mainly due to a higher uptake of the voluntary retirement scheme by employees and an increase in TV content costs resulting from additional investment in broadcasting rights undertaken by the Group in recent years.

However, in an attempt to mitigate the implications brought by the pandemic on the Group, GO adopted several operational cost-savings measures to lower its overall operating expenditure.

It is also important to note that as per 2020 results, GO reported an earnings per share of €0.13, however the Group recommended a larger than expected divided payment of €0.16 per share in the context of its reported earnings.

Overall, we like GO given its strong cash position and potential to further boost growth through Cablenet. Provided that the current situation will not deteriorate further, we are of the opinion that in the foreseeable future, GO’s defensive business model, will enable the Group to possibly continue distributing a dividend to its shareholders in the foreseeable future.