Telecom Plus (TEP) weathered fierce competition and falling energy prices to drive adjusted pre-tax profits up a tenth to £22.5m in the six months to September. That reflected its continued success in attracting consumers with cheap bundles of electricity, gas, broadband and both landline and mobile telephony.
The telecoms and utilities supplier, which trades as Utility Warehouse, grew its customer base by 2 per cent to more than 595,000. The total number of services it supplied rose 3 per cent to about 2.15m. Lower wholesale energy prices threatened to erode its price advantage, but rivals funnelled their savings into short-term deals rather than lower overall prices. In contrast, Telecom Plus has avoided aggressive introductory offers and subsequent price hikes in favour of consistent pricing.
Management has focused on bundling services in order to boost average revenue per user and discourage customers from switching suppliers. Telecom Plus recently began supplying and installing energy-efficient LED lightbulbs for free to homeowners who sign up for five or more of its services. The initiative led to 45 per cent of new customers taking five services in recent weeks, compared with 30 per cent in the reported period.
Broker Peel Hunt expects EPS of 55p this financial year, rising to 63.1p in the year to March 2017 (from 52.7p in FY2015).
| TELECOM PLUS (TEP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,053p | MARKET VALUE: | £839m | |
| TOUCH: | 1,053-1,057p | 12-MONTH HIGH: | 1,291p | LOW: 730p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 241p* | NET DEBT: | 35%† | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 (restated) | 265 | 14.5 | 13.5 | 19 |
| 2015 | 294 | 15.2 | 14.3 | 22 |
| % change | +11 | +5 | +6 | +16 |
Ex-div:03 Dec Payment:18 Dec *Includes intangible assets of £208m, or 261p a share †Includes £21.5m in deferred payments to Npower | ||||
