Telecom Plus Plc

Overview

An investment analysis of Telecom Plus PLC (LSE: TEP), owner of Utility Warehouse, using William J. O’Neil’s CAN SLIM framework, reconciled to the latest reported financials and credible market data to assess buy/sell/hold positioning.

Financial and Business Overview

Telecom Plus runs the UK’s only fully integrated multi-utility platform (energy, broadband, mobile, insurance) distributed via a national word‑of‑mouth Partner network. FY25 (year to 31 Mar 2025) delivered record profits and a higher dividend despite lower energy prices: revenue £1,838.2m (−9.9% YoY on price cap effects), gross profit £358.1m (+0.8%), adjusted PBT £126.3m (+8.1%), statutory EPS 96.3p (+7.1%), adjusted EPS 119.2p (+9.4%). Total dividend rose 13.3% to 94p with a target payout of 80–90% of adjusted post‑tax profit. Net debt was £115.9m, leverage 0.8x adjusted EBITDA, indicating conservative balance sheet risk. Free cash flow cyclicality from working capital (FY24 unwind) normalized with positive TTM FCF thereafter. Customer base grew 15% to 1.164m (services to 3.393m), with mobile +31% and broadband +9.2%. The company launched EV tariffs, expanded Full Fibre (incl. CityFibre promotions), strengthened multi‑SIM mobile, and relaunched insurance (Q2 FY26). FY26 guidance: adjusted PBT £132–138m, total customer growth ~15% (including remaining TalkTalk transfers).

Market Position & Competitive Advantages

Position: Only UK integrated multi‑utility with structural cost advantages from one back‑office across multiple revenue streams and superior cross‑sell/retention economics. Distribution via >71k Partners reduces above‑the‑line marketing dependence and helps convert multi‑service customers who churn less. Sourcing via E.ON for energy and national networks for broadband/mobile provides scale access without infrastructure risk. Service quality is externally validated (Which? Recommended for Energy and Broadband; Citizens Advice top for energy service). Growth catalysts: cross‑selling into acquired TalkTalk broadband cohorts; eSIM launch; AI‑enabled service operations; Partner network expansion. Risks: (1) Energy regulation (Ofgem price cap allowances and capital adequacy) can pressure margins and profit phasing; (2) Higher churn when fixed‑price introductory tariffs undercut the cap; (3) Bad debt (FY25 impairment 1.8% of sales) remains elevated post moratorium; (4) UK‑only concentration; (5) Execution risk in cross‑selling/insurance relaunch; (6) Competitive intensity from Big Six energy suppliers, alt‑net fibre, and MNOs; (7) Dependency on third‑party wholesale agreements (E.ON, Openreach/CityFibre, EE). Financially, modest leverage, strong cash generation through the cycle, and high payout policy provide shareholder support.

Stock Performance

Share price c. 1,836p (Oct 2025 snapshot) vs 52‑week range 1,580p–2,100p; ~12.6% below the 52‑week high and ~16% above the low. 50‑day average ~1,849p; 200‑day ~1,843p (sideways trend). Trailing P/E ~19.3x; forward P/E approximately mid‑teens using FY26 EPS estimates (~106–126p), consistent with MarketScreener/HL ranges. Dividend yield ~5.1% on a 94p FY25 dividend with a progressive policy (80–90% payout). Consensus stance is broadly Buy with average targets around £25–27, implying double‑digit to ~30% upside if execution and market conditions hold.

CAN SLIM Analysis

Conclusion

Fundamentals are attractive: recurring multi‑service model, double‑digit customer growth, disciplined balance sheet (0.8x leverage), rising earnings/dividends, and clear cross‑sell catalysts (TalkTalk cohorts, eSIM, EV tariffs). Valuation (mid‑teens forward P/E) and ~5% yield provide downside support. However, in strict CAN SLIM terms, TEP lacks strong current quarterly EPS acceleration and a price uptrend/new high. Regulatory phasing and higher churn in a competitive tariff environment are near‑term headwinds. For growth investors, keep on the watchlist and upgrade to BUY on (1) H1 FY26 results showing >20–25% EPS growth or clear operating leverage, and (2) a breakout above ~2,100p on volume in a rising UK market. Income‑oriented investors with a longer horizon may consider staggered accumulation, but the CAN SLIM‑style rating is HOLD pending a technical and earnings inflection.