Silknet’s revenue was up 14.9% y/y reaching GEL 397.3mn in 9M23. Mobile data and fixed broadband revenues were primary growth drivers, up 27.6% y/y and 18.6% y/y, respectively. This strong growth in revenue, paired with a modest 4.2% y/y rise in operating expenses, led to a record-high EBITDA margin of 64.5% in 9M23 compared to 60.4% in 9M22. For full-year 2023, we expect Silknet’s revenues to reach GEL 530.2mn, marking a 12.1% y/y increase.
Silknet sustained its strong market position, seeing a slight increase in subscriber market share across all key segments and an increased revenue market share within the mobile and Pay-TV segments. In the telecom sector revenue, Silknet accounted for 34.9% of mobile segment revenue, 33.6% of fixed broadband revenue and 37.3% of Pay-TV segment revenue in 9M23.
Silknet increased its market shares in 2 segments. Silknet accounted for 34.9% (vs 34.5% in 9M22) of mobile segment revenue, 37.3% (vs 35.4% in 9M22) of Pay-TV segment and 33.6% (vs 33.8% in 9M22) of fixed broadband in 9M23.
Operating expenses were up 4.2% y/y to GEL 242.7mn in 9M23. This increase was primarily driven by a GEL 9.6mn y/y rise in salary costs, of which GEL 8.6mn was a one-time bonus allocated to the company’s management. Significant share of operating expenses is fixed and does not directly align with the revenue growth. Additionally, as almost quarter of company expenses are US$- denominated, the strengthening of GEL limited increase. The company’s operating expenses are distributed across three major categories. In 9M23: 1) depreciation (36.6% of total) was down by 0.5% y/y to GEL 88.9mn, 2) salary expenses (24.3% of total) were up by 19.5% y/y to GEL 58.9mn (+2.1% y/y to GEL 50.3mn excl. the one-time management bonus), 3) purchased services (14.6% of total) were up 5.0% y/y to GEL 35.4mn.
Strong revenue growth, coupled with modest operating expense increases, drove adjusted EBITDA to surge by 22.7% y/y to GEL 256.1mn in 9M23. Consequently, the adjusted EBITDA margin reached a record high 64.5% in 9M23, compared to 60.4% in 9M22.
Net profit almost doubled to GEL 126.7mn in 9M23. Growth mainly attributed to impressive operating performance in 9M23 and a lower base effect in 9M22 due to a one-off finance cost related to Eurobond refinancing.
Silknet’s debt rating improved. Fitch upgraded Silknet’s debt rating from ‘B+’ to ‘BB- ‘in Aug-2023. This enhancement was primarily due to Georgia’s improved Recovery Rating from Group D (RR4) to Group C (RR3) in Mar-23. Overall, company’s ratings remained consistent: Fitch rated Silknet at B+/stable, Moody’s at B1/stable and Sustainanalytics maintained its ESG risk rating at 26.0.
