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Manx Telecom upgrades services

The rollout of fibre cables and 4G services has helped attract customers
March 21, 2017

It's easy to assume that a company that generates almost all of its revenue providing telecoms services in the Isle of Man - an island with a population of just under 90,000 people - would have limited space to grow. But Manx Telecom (MANX) is doing a good job at rolling out services to attract new customers.

IC TIP: Buy at 197p

True, revenue from the group's domestic businesses was flat in 2016, but this was predominately caused by a reduction in fixed-line voice revenue, something that's more attributable to changing digital trends than underlying problems at the company. Investment in fibre rollout sent group broadband revenues up 4.6 per cent to £9.1m, while higher 4G adoption rates helped lift revenues at the mobile business, particularly in the second half.

The group's 'transformation programme' consumed £4.3m-worth of investment which, along with fair value adjustments of £3m and acquisition-related costs, dented reported operating profits. On an underlying basis, operating profits were flat year on year. Customer experience and competitiveness benefits from this transformation programme are expected to show in FY2018 numbers, although broker Liberum expects adjusted pre-tax profits and EPS to rise to £16.7m and 14.5p, respectively, in the year to December 2017 (from £16.3m and 14.3p FY2016).

MANX TELECOM (MANX)

ORD PRICE:197pMARKET VALUE:£222m
TOUCH:195-198p12-MONTHHIGH:226pLOW: 179p
DIVIDEND YIELD:5.5%PE RATIO:25
NET ASSET VALUE:73.4p*NET DEBT:63%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201272.43.2nana
201376.00.40.7na
201479.35.75.49.9
201579.616.614.710.4
201680.88.87.810.9
% change+2-47-47+5

Ex-div: 25 May

Payment: 30 Jun

*Includes intangible assets of £88.8m, or 79p a share