Remember, Remember, the 20th of November as fireworks light up Telecom Plus (TEP). The multi-utility provider has brought forward its half-year results by six days to be upfront about trading as it unveils a £130 million cash call to fund a £218 million pair of energy supply businesses and secures a new 20-year energy supply deal from energy group Npower.
Telecom Plus, which trades as the Utility Warehouse, has positioned itself to bolster energy supply margins and offer more competitive tariffs, thanks to the ratchet effect of its Npower supply deal, where terms gets better with the more new customers Telecom Plus recruits. That's timely, coming just as watchdog Ofgem cranks up the pressure on suppliers to simplify tariffs, capping the number of offers to four per supplier.
Some investors may recall the Electricity Plus Supply and Gas Plus Supply businesses being acquired. Telecom Plus sold them to the German-owned energy giant in 2006 after getting caught in a wholesale prices cash crunch. This provides an opportunity to upsell calls, broadband and mobile services to many of these customers to which it already supplies energy.
It also ends any threat of returning to the cash flow rollercoaster days when Telecom Plus had to buy its own energy on the wholesale market and tackle the vagaries of seasonal demand.
Funded through a share placing priced at £14.75, plus extra bank loans, that the shares have shot up 16% to a record £17.48 illustrates how valuable the market sees today's events.
Half-year results have also impressed investors. Revenues are up 17% to £245.8 million, taxable profits more than 10% higher at £13.7 million and 33,908 new customers signed up. Average services taken rose from 3.72 per customer to 3.92.
Second-half trading promises to strengthen further with recent energy price hikes by the 'Big Six' suppliers sparking a switching-fest that Telecom Plus is already benefiting from, adding a net 12,000 customers and 50,000 net services in October.
