IN THE PRESS – The Megabuyte View: Tough year for pubs plays into Marston’s Telecoms hands

Whilst the past year has seen challenges, COVID-19 has sparked a rapid digital transformation of the economy, with Marston’s Telecoms set to increasingly benefit from this wave.

The article below was first published by Megabuyte on 12th May 2021
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We take a first detailed look at Marston’s Telecoms, which provides telecoms and related services to the brewing parent (80% of revenues) as well as SMEs across a broad range of verticals. Unsurprisingly, the company has been impacted by COVID-19, with accounts to September 2020 showing revenues down 9% to £6.4m due to pub-related projects being cancelled, though EBITDA rose 14% to £1.6m due to furlough support and ongoing cost initiatives. However, as outlined by Managing Director Tony Ford, pubs are starting to invest in digital transformation to become profitable at potentially lower levels of space utilisation than prior to COVID-19. 

Pub-focussed telecoms

Wolverhampton-based Marston’s Telecoms was founded in 2008 by (pre-COVID) £820m revenue brewer and restaurant operator Marston’s PLC as a cost-effective way to manage its communications, customer Wi-Fi and internet-connected gaming infrastructure across 2,000 sites. Over time it has been transformed into a private telecoms company, offering Broadband, Ethernet, Hosted voice, 24/7 Managed WAN and Security, Carrier Services and Managed WiFi initially to Marston’s partners and now more broadly to business customers and the wholesale channel. The business is led by Managing Director Tony Ford and, according to the website, employs 30 staff.  

Covid hit year

Fiscal 2020 was a tough year for Marston’s Telecoms as COVID-19 hit the whole hospitality sector hard, with multiple lockdowns and a lack of consumer confidence to visit pubs. Accounts to September 2020 showed EBITDA up 14% to £1.6m on revenues down 9% to £6.4m, with balance sheet capex additions also down 43% to £0.37m. The revenue decline reflects an 80% fall in Sales of Goods, though Service revenues increased by 5% to £6.2m, highlighting the resilience of the sector despite a turbulent year. EBITDA growth reflected ongoing cost initiatives combined with furlough savings.

Marston’s joins forces with Carlsberg

Parent company Marston’s PLC has recently undergone two significant developments. Firstly, merging with Carlsberg’s UK division in a reported £780m joint venture, with Marston’s PLC holding a 40% stake in the new firm under the name Carlsberg Marston’s Brewing Company, and secondly reaching an agreement with Cardiff-based brewer and hospitality company S.A. Brain, to operate its network of 156 pubs in Wales. This is likely to create significant opportunities for Marston’s Telecoms, given the importance of its parent company’s pub network, with the Carlsberg deal expected to generate an estimated initial £1m annual revenue boost.


Continued trading impacts

Despite the extra £1m revenue from the parent, Marston’s financials are likely to remain under pressure until the hospitality sector starts to recover, with some degree of normality expected in the second half of the year. Management is also maintaining the pre-COVID push into non-pub sectors, for example launching a new low-cost cybersecurity Managed Detection and Response service for SMEs, as well as a mobile based hosted voice service, Lingogo.

Digital transformation

Whilst this year has seen challenges, COVID-19 has sparked a rapid digital transformation of the economy, with Marston’s Telecoms set to increasingly benefit from this wave. Marston’s has spent significant time and resources investing into technology products which will help hospitality venues improve operational performance and create a better experience for the customer. This includes Pints N’ Bites pay at the table service, extended WiFi services, and footfall and location heat maps to identify waiting customers. There looks to be potential for Marston’s Telecoms to further capitalise on its technology product expansion and capabilities, in an industry where technology such as loT, Al and experience apps, will undoubtedly play a key role in years to come.

Megabuyte view

Marston’s Telecoms was as expected hit by the pandemic/lockdowns, but its financials remained resilient, as costs decreased, service revenues remained strong and non-Marston’s PLC customers grew. Whilst COVID-19 risks remain, a successful UK vaccine rollout means the company looks set to benefit from a consumer spending-led sharp economic recovery, with the parent’s typically rural pub locations meaning there will be the capacity of outdoor facilities even if social distancing continues. The digital transformation that has followed from this year could also present significant opportunities, as Marston’s Telecoms’ focus on technology, automation and better customer outcomes is exactly the sort of tech needed to thrive within the hospitality sector of tomorrow.

For more information please contact the Marston’s Telecoms team today by calling 01902 283 300 or emailing sales@marstonstelecoms.com.

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