Telecom Plus sees FY profits at bottom end of guidance, shares slide

(Sharecast News) - Telecom Plus tumbled on Tuesday as it warned that full-year profits would come in at the bottom end of guidance following reduced energy consumption during an unseasonably warm winter. The company - which trades as Utility Warehouse - had guided to FY26 adjusted pre-tax profit of between £132m and £138m.

In an update on trading for the year to the end of March, Telecom Plus said customer numbers rose 23.3% to 1.43m, including 193,000 fixed-line/broadband customers acquired from TalkTalk as part of a cross-sell trial partnership.

Organic customer numbers were up 10.3% to 1.26m and the total number of services it provided increased by 12.1% to 3.80m.

Telecom plus said that despite a 29% increase in mobile services, the group's overall organic services growth rate during was behind its customer growth rate, mainly due to strong competition in the energy and broadband markets. This resulted in lower-than-expected growth in energy and organic broadband services, while insurance services have been slower than expected to recover from the temporary pause in new insurance sales in FY25.

The churn rate nudged up to 14.2% from 13.7% a year earlier, reflecting the competitive environment, with the shape of the energy wholesale forward curve enabling competitors to offer fixed price energy tariffs meaningfully below the Ofgem price cap for much of the year.

Partner numbers rose to 77,000 from 72,000, with an "encouraging" increase in monthly active partners during the second half of the year.

The company also said on Tuesday that it was planning to review its shareholder distribution policy.

It intends to maintain a total payout ratio of at least 80% of adjusted pre-tax profit, but this will now be split between both dividends and share buybacks. At least 50% of the total payout each year will be allocated to ordinary dividends and the remainder to either share buybacks or special dividends.

"This revised policy recognises the cash generative nature of the group and its strong balance sheet and reiterates our commitment to maximising total shareholder returns," it said.

The company said: "While recent competitive dynamics have impacted services per customer and our churn rate, our unique platform and word-of-mouth route to market remain a proven model for delivering high quality, multiservice customers at scale, generating a long-term source of growing, recurring, subscription-style revenues. In addition, our wholesale energy supply arrangements continue to insulate us from the current energy market volatility caused by events in the Middle East.

"Our focus is on progressively increasing services per customer, reducing churn, growing contribution per customer, and enhancing customer lifetime values, in order to maximise long-term shareholder value. As a result, we are currently considering a number of potential initiatives to achieve these goals; we will provide an update on the outcome of this review together with our full year results for the financial year ended 31 March 2026, which we expect to announce on 23 June 2026."

At 1045 BST, the shares were down 12.5% at 1,244p.

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