(BFM Bourse) – Creator of a digital entertainment platform, Netgem announces the sale of its consumer fiber operator business in France to a subsidiary of Orange. Netgem had already announced its intention to refocus on its core business on the sidelines of its annual activity update.
The creator of the eponymous digital entertainment platform announced on Friday the sale of its consumer fiber operator business in France to Nordnet, a subsidiary of Orange. Netgem formalizes its withdrawal from its activities other than TV streaming for telecom operators.
In its press release, the company indicates that it will continue to provide its netgem.tv television service to Nordnet for all divested subscribers. Netgem adds that the revenue and gross margin of the divested business amounted to 4.7 million and 1.4 million euros respectively in 2022.
This sale should be finalized during the first half of 2023. The creator of the digital entertainment platform indicates that it will have a positive impact on cash flow of around three million euros. The company adds that the use of this sum will be the subject of a future communication.
“This operation is directly in line with the execution of our strategy of refocusing on our core business. I would like to thank the Banque des Territoires and the company Réunicable on this occasion, who have supported our development in France” declares the general manager of the group Mathias Hautefort.
The 500,000 subscribers exceeded
This operation is not a surprise. Netgem had expressed its desire to refocus on its business of providing very high speed broadband and VOD services, on the sidelines of its annual business update last week.
In 2022, the company achieved a turnover of 36.3 million euros, up 28% compared to the year 2021 which had then been a less flamboyant vintage for Netgem. The total annual turnover resulting from the TV streaming activity amounts to 29.5 million euros, of which 14.4 million euros give rise to recurring invoicing. Other income from this activity amounts to €15.1 million and includes in particular the sale of access equipment, service activation costs and non-recurring services.
The rest, i.e. 6.8 million euros, comes from activities to be sold in 2023. The gross margin increased by 14% to stand at 20.1 million euros.
On the subscriber side, Netgem created a surprise, exceeding its target of 500,000 subscribers. In 2022, the group claims a base of 508,000 netgem.tv subscribers. The company manages this subscriber base on behalf of some twenty fixed telecommunications operators in Europe, under the operator’s brand.
In 2022, the group indeed continued the deployment in the United Kingdom of TalkTalk TV 4K powered by Netgem, with a continuous improvement of the content offer. The group launched 90 new channels within its offer on the FAST Channel model [chaînes de télévision gratuites financées par la publicité sur Internet, NDLR].
In France, the group has taken over the management of the content and subscribers of its Reunionese client Zeop since October 1, 2022. In the Nordic area, the company has seen the success of the Premium offer of the Finnish channel Elisa Viidhe and anticipates a continuation of this growth in 2023.
Another year of growth
For the current year, the company anticipates more than 20% growth in its subscriber base in 2023, leading to similar growth in annual recurring revenue. According to Netgem, the revenues generated by the subscriber base will be sufficient to finance this growth, allowing to generate positive free cash flow in 2023.
The company is counting on the rapid evolution of the market towards standardized set-top boxes (decoder boxes) based on androidTV, to completely withdraw from the sale of access equipment and the associated working capital requirements. Netgem also intends to simplify its organization in 2023, allowing “a significant reduction” in its overheads.
On the Paris Stock Exchange, the digital TV service provider rose 4.1% on Friday after the announcement of the sale to Orange of its fiber business. Last Thursday, investors had already welcomed Netgem’s annual point (+3.51%). This series of good news has also fueled the stock’s 37.8% rise since the start of the year, bringing the record to levels more explored since August 2022.
Sabrina Sadgui – ©2023 BFM Bourse
Are you following this action?
Receive all the information about NETGEM in real time: