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Strong customer growth for Telecom Plus

Despite weaker-than-expected profit for FY2019, the future outlook remains positive
April 23, 2019

Telecom Plus’s (TEP) shares stumbled on the announcement that adjusted pre-tax profits will likely approach the lower end of guidance for FY2019 – £56m versus £54.3m in 2018. But despite a warm winter and an Ofgem cap reducing fourth-quarter revenues, full-year revenues, profits and dividends still hit record highs.

IC TIP: Buy at 1,430p

Despite a competitive pricing environment, customer numbers increased by 4 per cent, with a 5 per cent rise expected for FY2020. Customer quality improved as 26.6 per cent of membership subscribed for energy, broadband and mobile. With improved gross margins from renegotiated supply arrangements, earnings are expected to rebound this year.

House broker Peel Hunt expects adjusted pre-tax profits of £61m and EPS of 61.6p, rising to £65m and 66.2p in 2021.