The proliferation of connected devices and 'smart' machines has fuelled demand for data storage and bandwidth. That tailwind helped Manx Telecom (MANX), which controls three-quarters of the telecoms market on the Isle of Man, record a 14 per cent rise in first-half operating profit.
Catering to those trends hasn't been cheap, though. Manx tripled its capital spending to £4.5m as it invested in super-fast '4G' wireless and completed the first phase of building a new data centre. The group now offers 4G coverage to 95 per cent of the island's population. It also expects its increased hosting capacity to revive its stagnant data service revenues.
Manx's fixed-line, broadband and data sales crept up 2 per cent, reflecting strong demand for high-speed broadband. However, its mobile revenues dipped 4 per cent as fierce price competition, lower mobile termination rates and higher roaming discounts took their toll.
Manx has tried to offset those trends by diversifying into higher-margin services, such as machine-to-machine communications and enabling consumers' devices to roam across mobile networks in order to seek out the best signal and cheapest rate. These efforts seem to be paying off: sales rose 30 per cent to £8.3m at its global solutions segment.
The reported results were skewed by £7.6m of listing costs. Broker Liberum expects underlying full-year pre-tax profit of £13.2m, giving EPS of 12.4p.
| MANX TELECOM (MANX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 175p | MARKET VALUE: | £197m | |
| TOUCH: | 173-177p | 12-MONTH HIGH: | 186p | LOW: 155p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 74% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 37.9 | 0.3 | na | nil |
| 2014 | 39.5 | -5.1 | -5.1 | 3.3 |
| % change | +4 | - | - | - |
Ex-div: 16 Oct Payment: 10 Nov *Includes intangible assets of £84.8m, or 75p a share | ||||
