Telecom Plus shares surge 10% following boost in revenue

Telecom Plus (LSE: TEP) shares skyrocketed by 10% following the company’s announcement of an impressive 81% increase in profit, driven by a substantial boost in revenue. Additionally, Telecom Plus reported “record organic growth” in its customer base and an increased dividend payout.

During early trading in London, Telecom Plus shares reached 1,666.00 pence per share, reflecting the positive investor sentiment surrounding the company’s financial performance.

For the fiscal year ending on March 31, the FTSE 250 company recorded a pretax profit of £85.5 million, representing a substantial 81% rise from the previous year’s £47.2 million. The revenue figures were equally impressive, skyrocketing to £2.48 billion from £967.4 million over the same period.

Earnings per share experienced a notable surge, increasing by 92% to 86.6p from 45.1p. Telecom Plus responded to its strong financial results by declaring a final dividend of 46p per share, up from the previous year’s 30p. This brought the total full-year dividend to 80p per share, compared to 57p in the previous year.

The company also reported remarkable growth in its operations, achieving a 22% increase in its customer base. The total number of customers rose to 886,579 individuals from 728,680 in the prior year. Additionally, the services supplied by Telecom Plus increased by 24%, reaching 2.8 million from 2.3 million.

Looking ahead, Telecom Plus expressed its intention to potentially return surplus capital to shareholders through share buybacks. However, the company also said that the actual amounts would depend on the availability of capital after funding organic growth, modestly increasing dividends, and maintaining an appropriate gearing level.

Telecom Plus acknowledged the potential challenges presented by the lowered Ofgem Price Cap, which has been set at £2,074 per year starting from Saturday. The company noted that the cap might create a modest headwind this year by reducing the average revenue per customer and diminishing the sense of urgency among customers to switch their energy suppliers. Nonetheless, Telecom Plus remains confident in its ability to remain competitive due to its unique multiservice proposition, particularly in a more stable environment.

The company expects comfortable annual customer growth in the double-digit percentage range and anticipates a similar increase in pretax profit.

Co-Chief Executive Officers Andrew Lindsay and Stuart Burnett expressed their satisfaction with the company’s performance, stating, “This has been an outstanding year for the company: the fundamental strengths of our business model have reasserted themselves and delivered a strong outcome for all our stakeholders – particularly for our customers who benefitted from the lowest energy prices in the country throughout the year, saving over £30 million on their bills.”