Interactive Investor

ii view: income play Telecom Plus nears one million customers

A unique business model and sat on an attractive historic and estimated future dividend yield. Buy, sell, or hold?

21st November 2023 11:44

by Keith Bowman from interactive investor

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TelecomPlus 600

First-half results to 30 September

  • Revenue up 57% to £884 million
  • Adjusted pre-tax profit up 36% to £43.7 million
  • Interim dividend up 6% to 36p per share
  • New £10 million share buyback
  • Net debt of £83 million, compared to cash held of £103.4 million in late March

Andrew Lindsay & Stuart Burnett, co-chief executives, said:We have consistently offered the lowest-priced energy tariffs in the UK for over two years. Our unique multi-service model means we can continue to sustainably beat the competition, and is the primary driver of our continued rapid growth.”

ii round-up:

Bundled utility provider Telecom Plus (LSE:TEP), which trades under the Utility Warehouse brand, today detailed a more than one-third increase in adjusted profits as customer numbers rose to a record 949,180. 

Elevated energy prices and expanded customer numbers pushed first-half revenues up 57% to £884 million, fuelling a 36% improvement in adjusted profit to £43.7 million and aiding a 6% hike in the interim dividend to 36p per share.

Shares for the FTSE 250 company fell by more than 3% in UK trading having come into this latest news up by close to a quarter over the last five years. That’s similar to transmission provider National Grid (LSE:NG.) and way ahead of a 2% rise for British Gas owner Centrica (LSE:CNA) over that time. 

Telecom Plus supplies both households and small businesses throughout the UK with services from electricity and gas to broadband, mobile phone contracts and even insurance policies. 

The UK’s seventh-largest energy supplier also confirmed the stepping down of co-head Andrew Lindsay, with fellow co-head Stuart Burnett taking sole charge as of summer 2024.  

The number of services the firm supplies to customers increased by 170,698 during the half year to a total of 2,968,846. Customer bad debts increased to £18.8 million or 2.1% of revenues, up from last year’s £8.5 million or 1.5% of revenues. 

A full-year trading update is likely in late April. 

ii view:

Started in 1996, Telecom Plus focuses mainly on the residential market. Rather than advertising or using price comparison sites, Telecom Plus uses around 65,000 paid partners or representatives to sell its services to new customers. Electricity supply accounted for almost 50% of all revenues during its last financial year, with gas supplied a further 40%. Fixed communications such as broadband comes in at 5%, with the 5% balance split relatively evenly between mobile phone contracts and other services such as insurance. 

For investors, costs generally for businesses remain elevated with staff and technology costs during this latest period pushing up administrative expenses. Customer bad debts require monitoring, with any major upturn in UK unemployment likely feeding in, while geographical exposure is currently limited to the UK only. 

More favourably, pressure on consumers to save on household bills persists given elevated mortgage and rental costs. A differentiated business model sets it apart from actual suppliers such as Centrica. Climate change and required energy transition may more broadly keep energy prices volatile going forwards and fuelling demand for its cost-saving services, while a new £10 million share buyback programme is to be executed. 

On balance, and despite ongoing risks, a utility-related business offering a historic and estimated future dividend yield of over 4.5% is likely to keep income-oriented investors at least patient. 


  • Differentiated business model
  • Targeting one million additional customers over the medium term


  • Elevated costs
  • Rising customer bad debts

The average rating of stock market analysts:


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