Telecom plus PLC To Meet Full-Year Profit Expectations

The share price of Telecom plus (LSE: TEP) increased 3% to 1,870p during early trade this morning, after the multi-utility supplier expressed confidence in reporting full year profits in line with market expectations. Over the previous 12 months, Telecom plus’s share price has increased by 83%.

During the three months ended 31 December the company added 18,439 customers and 81,429 services, compared to 11,356 and 18,439 respectively a year earlier. Telecom plus called this a “significant” improvement and reflects a continuation of the fast growth rates achieved during the first half of the year.

Telecom plus introduced a new bundle for customers in November, combining all five of the firm’s core services (gas, electricity, landline, broadband and mobile), and the proportion of new customers subscribing to this deal was 20%.

Simultaneously, there has been an increase in the proportion of new customers choosing to switch their energy services to Telecom plus, largely because of widespread coverage of the energy industry by politicians and the press recently.

Opus Energy, a group which Telecom plus has a 20% investment, is performing ahead of budget and should deliver record turnover and profits for the current financial year. Opus energy is the largest independent provider in the business energy market.

 The chief executive, Andrew Lindsay, commented:

“This has been an exceptionally busy year for us, in which we have achieved some important milestones. These include reaching 500,000 customers in November, as well as completing a transformational £218m deal with npower which secures our wholesale energy for 20 years on improved commercial terms.”

“I am particularly pleased with the recent doubling in the proportion of new members who are taking all five of our core services since we introduced our new Gold Bundle service structure in November, and the continuing steady improvement in the quality of our customer base.”

Before today analysts were predicting Telecom plus’ upcoming annual results would reveal earnings per share of 59p, supporting a dividend of 30p per share. Today Telecom plus confirmed its intention to increase the total dividend by 13% to 35p for the current financial year.

Therefore, following today’s price movement the shares may trade on a P/E of 32 and offer a possible income of 1.9%.

The decision to ‘buy’ — based on those ratings, today’s results, and the wider prospects of the utilities sector — is, of course, solely your own decision.

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> Mark does not own shares in any company mentioned.