Interactive Investor

ii view: Telecom Plus bullish as customer numbers rise

Trading under the ‘Utility Warehouse’ brand and offering an attractive forecast dividend yield. Buy, sell, or hold?

11th October 2023 15:49

by Keith Bowman from interactive investor

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First-half trading update to 30 September

  • Added over 62,500 new customers
  • Expects to pass the one million customer milestone this financial year
  • Full-year forecasts unchanged

Andrew Lindsay & Stuart Burnett Co-chief executives said:

"Our disruptive model - of not simply supplying energy, telecoms or insurance like other suppliers, but bundling those services together and sharing the savings we make with our customers - means we have consistently been offering the lowest priced energy in the country for the past two years.”

ii round-up:

Bundled utility provider Telecom Plus (LSE:TEP), which trades under the Utility Warehouse brand, today said it expects to reach the one million customer marker before the end of this financial year.

New customers for the first half to the end of September rose by more than 62,500, or 14% year-over year, to 949.180 UK households, buoying management hopes to double the size of its customer base over the medium term. 

Shares in the FTSE 250 company fell by more than 1% in afternoon UK trading having come into this latest news up by more than 40% over the last five years. That’s similar to renewable energy generator SSE (LSE:SSE) and way ahead of a near 10% gain for British Gas owner Centrica (LSE:CNA).

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

Rather than advertising or using price comparison sites, Telecom Plus uses paid partners to sell its services to new customers, the number of which jumped by a quarter over its last financial year to the end of March to almost 60,000, as people sought opportunities to increase their income.   

The number of services Telecom Plus supplies to customers increased by 170,698 during the half year to a total of 2,968,846. Management flagged the strong ongoing multiservice take-up of new customers as they sort to maximise savings on household bills. 

An updated long-term energy contract with supplier E.ON had also been negotiated to 2033. There were no changes to full-year forecasts this time ahead of half-year results scheduled for 21 November. 

ii view:

Started in 1996, Telecom Plus focuses mainly on the residential market. Its partners or representatives look to offer the four core services of electricity, gas, broadband and mobile phone services, along with other services such as insurance and a cashback payment card. Electricity supply accounted for almost half its revenues during the last financial year, with gas supplied a further two-fifths. Fixed communications such as broadband account for a further 5% of revenues, with the balance of close to 5% split relatively evenly between mobile phone contracts and other services.  

For investors, costs generally for businesses remain elevated, with staff and technology costs during its last full financial pushing up administrative expenses. Customer bad debt requires monitoring, with any major upturn in UK unemployment likely having an impact there, while geographical exposure is currently limited to the UK only. 

On the upside, pressure on consumers to cut household bills persists given elevated mortgage and rental costs, and a differentiated business model sets it apart from actual suppliers such as SSE and Centrica. Climate change and required energy transition may more broadly keep energy prices volatile, fuelling demand for its cost saving services, while group net cash of over £100 million was held as of late March. 

For now, and while some caution looks sensible given the weak share price performance, a utility related business offering a historic and forecast dividend yield of over 5% is likely to keep income investors interested.


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


  • Elevated costs
  • Possible rising customer bad debts

The average rating of stock market analysts:


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