Machine-to-machine (M2M) communications specialist Telit Communications saw the coronavirus pandemic take a heavy toll on revenue figures in 2020, although IoT and connectivity services remained strong performers during the year.
The company, which already reported lower turnover in the first half of the year, said total group revenue fell 10.2% to $343.6 million in 2020, although IoT Cloud and connectivity revenue increased by 7.3% to $44 million, "driven by a strong performance of both the connectivity and the IoT platforms businesses."
Despite the lower revenue, Telit was able to report an improvement in operational results as a result of efficiency measures that were adopted early in the year.
It said adjusted EBITDA increased 6.3% to $40.6 million and it was still able to post a pre-tax profit of $7.9 million, although that contrasted with a year ago – profit of $59.9 million.
Nevertheless, it was able to boost net cash to $63.7 million from $48.2 million in the previous year.
Paolo Dal Pino, CEO of Telit, conceded that the ongoing economic fallout of the pandemic made it difficult to see clearly ahead, although he said the "acceleration and adaptation of IoT solutions triggered by the pandemic will create medium-term benefits for the IoT market and we expect a ramp up of customer demand in 2021."
Chairman Simon Duffy said the swift actions taken at the beginning of 2020 enabled Telit to minimise the impact of COVID-19 and offset many of the pandemic’s adverse impacts on its business.
"As a consequence, and despite the slowdown in customer demand, 2020 was a better year for the group than might have been expected a year ago when the pandemic was just upon us and uncertainty was at its height," he said.
Duffy also made some comments on a potential takeover of Telit, noting that DBAY – an activist private equity group that has become Telit's largest shareholder – is doing due diligence ahead of a formal takeover bid.
"Shareholders are reminded that there can be no certainty that any offer will be made, nor as to the terms on which any offer will be made," he said.
According to This is Money, some shareholders have been furious that DBAY has been allowed to do due diligence before committing to an offer, and have also questioned why other companies were not invited to take part in a formal auction process.
DBAY is said to own 26% of Telit’s share capital. It showed interest in buying Telit last year but walked away from talks in December 2020.
Duffy noted that Telit received several buyout offers in the last few months of 2020, but had concluded that the "proposed terms did not adequately reflect the fundamental value of Telit’s business."
Telit claims that even without an acquisition, it believes it is well positioned to "maintain and grow our leading position in the market by increasing the differentiation of our products and services through targeted investment in key areas like 5G."
As well as selling IoT products and platform services, the company said it has become a licensed MVNO for the provision of coverage and networks, including low power wide area (LPWA) networks in 190 countries.
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— Anne Morris, contributing editor, special to Light Reading