Telecom Plus, the FTSE 250 company operating as Utility Warehouse, has announced a £275 million investment plan aimed at countering rising customer churn and stimulating growth amid weakening investor confidence. The firm outlined intentions to allocate £55 million annually over the next five years, focusing on expanding its customer base purchasing multiple utility services and enhancing sales and marketing efforts.
The company seeks to more than double the number of customers subscribing to more than two services—from energy and broadband to mobile and insurance—to over one million by 2031. Utility Warehouse incentivizes bundled subscriptions by offering discounts, with the company noting that “multiservice” customers remain with the firm longer and generate significantly higher returns, averaging £185 in value after acquisition costs, compared to £103 from single-service customers.
Despite these strategic moves, Telecom Plus’s shares closed down sharply by 26 percent to 710 pence, marking a 65 percent decline over the past year. The drop reflects investor concerns over slowing growth and increased market competition, particularly in the energy and broadband sectors, which have contributed to a rise in customer churn from 13.7 percent to 14.2 percent.
Chief Executive Stuart Burnett emphasized the importance of multiservice customers, describing them as the primary drivers of long-term value due to their loyalty and higher profitability. However, the group’s revised spending commitments have led to downward adjustments in profit forecasts. Adjusted pre-tax profit for the current year is now projected between £80 million and £90 million, significantly below the £143 million anticipated by City analysts and down from £132 million the previous year. The company targets adjusted pre-tax profits of £175 million by 2031.
Reflecting these challenges, Telecom Plus’s broker Peel Hunt has lowered its pre-tax profit estimate for the current fiscal year by 39 percent to £85 million. In addition, the company has altered its shareholder return policy, reducing the ordinary dividend and planning to distribute 50 percent of total returns through share buybacks of special dividends. A final dividend of 12 pence per share has been declared for the past year, down from 57 pence previously.
The company indicated it will initiate buybacks if shares trade below a valuation threshold of 20 times post-tax earnings—a level the stock currently falls under. Earlier this year, Telecom Plus also signaled that profits for the 12 months ending March would fall at the lower end of prior guidance, partly due to reduced energy consumption amid an unseasonably mild winter.
Despite these headwinds, the group reported a 6 percent revenue increase to £1.9 billion and a 7 percent rise in pre-tax profits to £113 million in the previous year, underscoring ongoing demand for its bundled utility offerings even as competitive pressures intensify.