Unidata Investment thesis
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Unidata: Analysis of its 2024-26 strategic plan + thesis update

Unidata presented the 2024-2026 plan with important strategic announcements regarding the roadmap of the business model. Last week, the company released the 9M results which were in line with what the market expected and the 2023 year-end targets. 

9M results and 2023 targets

9M results have been very strong with +16.4% organic growth (without TWT acquisition) and +120% on a proforma basis (TWT consolidated from 1st January). The number of customers has also grown by 20% leveraging the increase in fiber network. The ARPU has continued to fall in the Consumer Unidata segment and a positive trend continues in the Business segment. The network is now above 6,200 km with 300km added in Q3. 

Unidata Growth & EBITDA

For 2023, the management expects proforma revenues of about €97 million and EBITDA of €25 million 

2024-2026 Plan

The key point of the call for us was the intention to rely a bigger part of the revenues on recurrent services leveraging the already available infrastructure. Their target is to drive it up from 64% of total sales in 2023 to 79% in 2026. This more favorable revenue mix will add further visibility making the company not fight each year for additional sales, and will allow it to optimize its working capital.

Unidata calculations

Unifiber (the most advanced Joint Venture) is developing very well and is starting to impact revenues with c. €13 million in revenues for the nine months for a €7 million investment by Unidata. The JV will be completed in 2025 connecting 200k residential units and 8k businesses. Our rough estimate is that across the 2023-2027 period, the cumulated revenues for the network construction could be above €65 million. And once it finishes, Unifiber will be able to resale the network to other wholesale.  

With more than €15 million won on tenders this year, the idea is to keep growing the IoT business and reinforce its position in the Business, Wholesale, and Public Sector markets. They see a lot of potential with the Rome public sector which is a big potential customer not targeted yet by Unidata. Regarding the 5G and Wifi tender in Rome that should have been finally signed in November, the negotiation seems to continue smoothly and an SPV has been already set up. 

The 2026 targets are the following: 130€-140€ million in revenues and €37-41€ in EBITDA which is a +28% EBITDA margin versus the 25% expected for 2023. It may seem little growth in 2025 €128-€134 but here it was previously included in the voice trading business (around €17 million in sales). So, from 2022 to 2026, the management expects an 11% and 17% CAGR growth in sales and EBITDA.

Capex for the 2023-2026 period came higher than we expected with a cumulative capex of €56 million for the three years being €14 million financial investment. The management also commented they are comfortable with the analyst consensus on FY24 (€120MM revenues and €29.5MM EBITDA).

Valuation

From 2024, the Unidata/TWT breakdown will disappear, so we have adjusted our model to reflect it. We have also revised some assumptions.