Shares in Telecom Plus (TEP) tumbled 9 per cent in two days after a broker highlighted that a supply contract with Npower that has locked the telecoms and energy provider into charging higher prices than its competitors.
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The 20-year deal - signed in late 2013 - requires Npower to supply gas and electricity to the group at 14.5 per cent below the industry's benchmark tariff, says RBC Capital Markets. But rivals are now undercutting Telecom Plus by about 30 per cent with fixed-price deals, potentially sapping the group's growth. Eon has already reduced its gas prices by 5 per cent and the rest of the 'Big Six' energy suppliers are following suit.
Broker Peel Hunt expects EPS of 55p in the year to March 2016 (FY15: 52.7p).
