Silknet - Continuing growth momentum in 2023

In 2023, Silknet’s total revenue grew 13.4% y/y to GEL 536.4mn, in line with our forecast. Mobile data continued to drive revenue growth, maintaining a trend observed since 2020. Overall, commercial revenue at GEL 487.9mn saw a 14.0% y/y increase, perfectly aligning with our projected growth of 13.6%. The strong revenue performance combined with the moderate growth in operating expenses propelled Silknet’s adjusted EBITDA to reach GEL 337.9mn in 2023, reflecting an 18.9% y/y growth. The company’s enhanced free cash flow generation facilitated record-breaking dividend distributions of GEL 128mn in 2023. Moreover, after successfully reducing leverage from 2.6x in 2021 to 1.6x in 2022, Silknet further decreased its net debt to EBITDA ratio to 1.2x in 2023. This achievement stemmed from improved cash generation over the past two years, coupled with the stability of the GEL, providing the company with operational flexibility.

Looking ahead to 2024, we expect Silknet’s revenue to grow at a mid single-digit rate, primarily fueled by mobile data. The strong double-digit revenue growth witnessed in 2022-2023 was largely attributed to multiple price increases, although some organic growth was also evident. We project this organic growth to continue in 2024, driving commercial revenue up by 8.6% y/y to GEL 529.7mn and overall revenue up by 7.1% y/y to GEL 574.6mn in 2024. We forecast adjusted EBITDA to reach GEL 353.8mn in 2024, translating into a solid 61.6% EBITDA margin including IFRS 16 adjustments.