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High-yielding Manx Telecom makes hay from faster web connections

The Isle of Man telco capitalised on previous mobile and broadband investments.
March 31, 2016

Consumers and businesses are clamouring to surf the web at high speeds and stream videos and songs on the move. Manx Telecom (MANX), the dominant telecoms provider on the Isle of Man, made sure to meet their demands in 2015. The upshot was a 6 per cent rise in underlying operating profit to £18.6m.

IC TIP: Buy at 215p

Manx expanded its broadband services and launched a 'superfast' option, sending sales up 2 per cent in its major landline, broadband and data segment. It also rolled out rapid 4G wireless services to pay-as-you-go customers, driving mobile revenue up 9 per cent. Moreover, data centre revenue leapt a fifth as its Greenhill facility's new tenants snapped up equipment.

The sore spot was a 15 per cent slide in sales of global solutions, as brisk demand for machine-to-machine and mobile roaming solutions failed to offset lower text messaging revenue. But on the bright side, management renewed a major five-year contract with the Isle of Man government. It also completed the second phase of development at its Greenhill data centre, supporting its range of managed services such as hosting, cloud and disaster recovery.

Broker Liberum expects pre-tax profits of £15.3m in 2016, giving EPS of 13.4p (from £16.6m and 14.5p in FY2015).

MANX TELECOM (MANX)
ORD PRICE:215pMARKET VALUE:£243m
TOUCH:214-216p12-MONTH HIGH:217pLOW: 178p
DIVIDEND YIELD:4.8%PE RATIO:15
NET ASSET VALUE:81p*NET DEBT:57%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201169.1-0.7nana
201272.43.2nana
201376.00.40.7na
201479.35.75.49.9
201579.616.614.710.4
% change+0+190+171+5

Ex-div: 26 May

Payment: 24 Jun

*Includes intangible assets of £84.6m, or 75p a share