Join our community of smart investors

Manx bets on superior connectivity

But expanding the network has come at a cost to the bottom line to the Isle of Man telco
September 13, 2017

Mainland telcos could learn something from Manx Telecom (MANX). The leading communications provider on the Isle of Man has reported a 4 per cent increase in revenues from both broadband and mobile in the first half of its financial year, thanks largely to its investment in superior quality connectivity. Today, 93 per cent of the island’s residents have access to broadband download speeds of up to 40 Mbs for its standard service or 80 Mbs for its premium service (the UK average is 36 Mbs), and 99 per cent are covered by its 4G network.

IC TIP: Buy at 195p

But mobile and broadband make up just 39 per cent of total sales and difficulties elsewhere in the business dented reported numbers. Fixed-line revenue dropped 3 per cent due to a decline in demand, while the merger of two of the group’s Data Centre customers sent revenue here down 32 per cent to £2.3m.

Profit figures were also somewhat gloomy following another period of investment. But even after stripping out the £1.9m spent on transformation costs and £0.1m of acquisition costs, adjusted cash profits fell 9 per cent to £12.6m.

Broker Peel Hunt expects adjusted pre-tax profit and EPS of £16.3m and 14.2p for the year to December 2017, flat on last year.

MANX TELECOM (MANX)  
ORD PRICE:195pMARKET VALUE:£222m
TOUCH:193-196p12-MONTH HIGH:221pLOW: 172p
DIVIDEND YIELD:5.7%PE RATIO:29
NET ASSET VALUE:71.2p*NET DEBT:76%
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201639.26.35.63.7
201738.55.24.63.9
% change-2-17-18+5
Ex-div:12 Oct   
Payment:tbc   
*Includes intangible assets of £88.7m, or 77.8p a share