Telecom Plus H2 2025 Earnings Report

Telecom Plus EPS Results

• Actual EPS: GBX 119.20
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Telecom Plus Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Telecom Plus Announcement Details

• Quarter: H2 2025
• Date: 6/24/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, June 24, 2025
• Conference Call Time: 4:00AM ET

Telecom Plus (LON:TEP) provides a range of utility services in the United Kingdom. It offers various services, including gas, electricity, fixed line telephony, mobile telephony, broadband, and insurance, as well as bill protection and life cover, home insurance and boiler cover, and cashback card services under the Utility Warehouse and TML brands. Telecom Plus Plc was incorporated in 1996 and is based in London, the United Kingdom.

Telecom Plus H2 2025 Earnings Call Transcript

Key Takeaways

• Telecom Plus delivered record FY25 results with 15% total customer growth (12.5% organic), over 8% adjusted PBT increase to £126m, and a 13% dividend rise to 94p.
• For FY26 management guides ~15% total customer growth (low double-digit organic), adjusted PBT of £132–138m, and a full-year dividend increasing in line with adjusted net profit.
• The company entered a cross-sell trial partnership with TalkTalk, acquiring ~95,000 broadband and landline customers to test a blueprint for upselling energy, mobile and insurance via its multi-service platform.
• Admin costs fell by 5% year-on-year despite double-digit growth, driven by efficiency initiatives including investments in AI and digitization, aiding customer service quality and future operating leverage.
• Insurance sales have fully relaunched after regulatory review, with integration into the customer journey and plans to expand into additional lines (motor, travel, pet) to boost multi-service penetration.

Presentation

[Stuart Burnett, CEO at Telecom Plus]

Good morning, everybody, and welcome to the Telecom plus Full Year Results Presentation for the year ending thirty one March twenty twenty five. I'm Stuart Burnett, CEO, and I'm joined by Nick Schoenfeld, CFO. And we're very pleased to report another year of record performance across the board, resulting in record customer and service numbers as well as record profits and returns to shareholders. Now before we get into the detail today, here's a quick overview of the running order this morning. I'm going to kick off with a run through of our highlights for FY 2025.

[Stuart Burnett, CEO at Telecom Plus]

Nick will then take you through our continued strong financial performance, and I'll then finish with our exciting outlook for the years ahead. And as we go through the update today, think there were three key takeaways that you can see on this slide. First of all, once again, our compounding double digit growth performance is underpinned by three things: our unique multi service subscription style business model secondly, our structural cost advantage and thirdly, our partner route to market. And together, these three things enable us to sustainably outcompete as we stride on towards our medium term target of 2,000,000 customers with expectations of growing at between 1015% a year as we go. And in FY 2025, of course, we delivered 15% total customer growth with over 12.5% underlying organic customer growth.

[Stuart Burnett, CEO at Telecom Plus]

Second, for the new financial year, for FY 2026, we expect total customer numbers to increase again by around 15%, with underlying organic growth in the low double digits. And for adjusted profit before tax, we expect a range of between 132,000,000 and £138,000,000 And then over time, as we head towards that £2,000,000 customer target and beyond, we see a real opportunity to increase our EBITDA per customer from the sort of the mid-one £120 s mark up towards that £150 mark. And then third, we've entered into an exciting cross sell trial partnership with TalkTalk for around 95,000 broadband and landline customers with the aim to cross sell additional services from our multi service platform, utilizing our partners as a unique cross sell channel. And as we prove this out, we'll end up with, I guess, what something you can think of as a blueprint for acquiring further books of customers, further books of single service customers from across our service lines into which we can create value by cross selling our multi service offering. So, without much further ado, here are the business highlights for the financial year with the headlines set out on this slide.

[Stuart Burnett, CEO at Telecom Plus]

And as you can see, and as we've said, we had another very strong year in FY 2025. We saw a 15% annualized increase in customers, over 12.5 of which were acquired organically, with service numbers increasing by over two and sixty five thousand. Gross profit was up around 1%, as expected, reflecting significantly lower energy prices during the year compared with FY 2024, with adjusted profit before tax up just over 8% to over £126,000,000 in line with consensus. Now you might recall that in the first quarter of last financial year, energy prices were particularly high, and that resulted in a positive impact of a handful of millions of pounds last year. And when you strip that out, profit growth in FY 2025 was in line with customer growth.

[Stuart Burnett, CEO at Telecom Plus]

And of course, this profit trajectory was aided by admin costs falling despite double digit growth, which is driven by our ongoing efficiency initiatives, including our investments in digitization and AI. And then finally, we've increased the full year dividend by 13% to 94 p, in line with our policy of distributing 80% to 90% of adjusted profit after tax. Now, it goes without saying that we are, once again, very pleased with these results. And I think it's important to call out that we're now four years into delivering double digit percentage growth in both customers and profits, and that trend gives us significant confidence about the future. But to understand exactly how the business delivered this record performance and why it's such a positive indicator of what's to come, think it's important to also understand the key competitive dynamics in play during the year that you can see on this slide.

[Stuart Burnett, CEO at Telecom Plus]

Now, first of all, over the last year or so, I think everyone in their in their own lives would have sort of seen some of this firsthand. Competition has firmly returned to the energy market. All major suppliers are out there advertising and actively seeking to acquire new customers. But despite this, given the sort of the stable and resilient marketplace that we're now in, pricing strategies have remained rational, as they should be in a highly regulated, commoditized, essential services marketplace. Now, having shown that the business can grow rapidly when energy prices rose significantly in FY '22 and FY '23, and also when energy prices fell significantly in FY '24, we've now demonstrated how the business can continue to grow rapidly when energy prices have been much more stable, with the price caps over recent quarters moving more by tens of pounds a quarter rather than hundreds or even thousands of pounds a quarter.

[Stuart Burnett, CEO at Telecom Plus]

And as a result of this, as we mentioned, we've delivered our fourth consecutive year of double digit organic customer growth. And you can see the bar charts on the left hand side here, which show the impressive four year compound annual growth rate from FY 'twenty one through FY 'twenty five of over 15% for customer growth and over 22% for adjusted profit before tax growth. Now, our slightly slow rate of service growth in FY 'twenty five is due to a combination of things, including: first of all, the temporary pause on new insurance sales that you'll be aware of, an increase in customers taking our two service bundle versus our three service bundle, and an increase in some customers taking mobile only services from us. Going forwards, we expect service growth to pick up, first of all, now that we've fully relaunched our insurance products, and also as we build out our cross sell capabilities, which I'll come onto a little bit later. So those are some of the key dynamics in play during the period.

[Stuart Burnett, CEO at Telecom Plus]

And in broad summary, we're essentially back to exactly the sort of marketplace that our business model was originally designed for. And here you can see on the screen that very simple, but incredibly powerful business model. Now, you've all seen it before, so we'll jump straight in to showcasing some of what we've been doing across each of the three key pillars, starting with our unique multi service subscription platform. Now, we are continually improving our proposition to make sure that we're consistently competitive and giving our customers what they're asking for. Now, at the half year, we stepped through various developments, including our EV tariff launch, our faster full fiber broadband launch, our growing partnership with City Fiber, and our multi SIM mobile offering.

[Stuart Burnett, CEO at Telecom Plus]

So since then, there have been a number of additional highlights, including something which we're all very proud of here, is attaining the Which Recommended Provider award for both energy and broadband. And that makes us the first provider to ever hold both of those awards at the same time. Now, that's testament, I think, to two things. First of all, to the incredible service that we provide our customers, but also to the fact that we're uniquely positioned as the only true multi service provider in The UK. On the energy side, we also launched our new free energy days initiative to reward our highest value multi service homeowner customers with free energy.

[Stuart Burnett, CEO at Telecom Plus]

On broadband, our big move was to launch a loyalty or so recontracting tariff for broadband customers who reached the end of their contract so that they don't face such a steep price increase after their initial term. And that's sort of a key part of the ethos of the business of providing long term peace of mind pricing. And then in mobile, service growth continues to go from strength to strength with our new multi SIM offer helping to take our mobile service numbers over the 600,000 mark. And finally, on our unique cashback card, from which our customers are now consistently month after month receiving over £1,000,000 in cashback, which reduces their body, gets knocked directly off their multi service bill with us, and that really builds that extra level of loyalty. And into that program, we've added recently all of the major mobile mobile, major cinema chains alongside Caffe Nero and Pizza Express.

[Stuart Burnett, CEO at Telecom Plus]

And we're also trialing various additional initiatives like trialing free cash back cards for some customers to see whether that will boost take up. Cause we know that when customers take the cashback card and use the cashback card, they're now our longest standing, most loyal customers. And then, to top it all off, our multi service proposition is getting back to full strength now that we've fully reopened insurance sales. So just by a bit of background here, we launched insurance as our fourth core service a few years ago. When we did that, uptake really started to build, and we actually saw a 40% increase in insurance policy numbers during FY24.

[Stuart Burnett, CEO at Telecom Plus]

And we also took the step to set up our own in house underwriter to provide security of supply. Now, as we discussed last year, we began a product review with the FCA. And as part of that, we voluntarily paused new sales of our bill protector and boiler and home cover policies. And since then, our positive dialogue with the regulators resulted in all of our insurance products being cleared for new sales, and we've now fully reintegrated them into the customer journey, with our boiler and home cover policies returning to the front end new customer sign up journey since April. Now, that brief pause in new sales for insurance resulted in a moderate fall in insurance service numbers during FY 2025, but we expect to see a return to growth in this service line now it's fully reintegrated.

[Stuart Burnett, CEO at Telecom Plus]

And it's a service line that we're really excited about. There's a significant opportunity to scale. Currently only around 10% or so of our existing customers take insurance from us. And at the same time, we're exploring what other complementary insurance products we could add into our current offer. So currently, we offer home insurance, boiler cover and a sort of an income protected product.

[Stuart Burnett, CEO at Telecom Plus]

And we're exploring how over time we can add motor, travel, pet and potentially other insurance lines as well. In addition to that, we're also actively looking at how we can leverage our sort of really broad, wide ranging in house data that we collect from our multi service customers to support insurance growth and performance. So, long story short, it's really great to get insurance properly back on the road and we're really looking forward to building out and growing this exciting service into a key part of our multi service bundle going forwards. So, our multi service platform is in great shape. And the great thing about multi service customers is that they are core to enabling us to generate our unique structural cost advantage.

[Stuart Burnett, CEO at Telecom Plus]

And to underpin our structural cost advantage, we've been increasingly focusing on driving efficiency across the business, especially given the way that our admin costs increased as we went through the energy crisis. And we're pleased to see, as we indicated at the half year, that our admin costs in FY '25, not only did they increase below the rate of customer growth, but they actually decreased by 5% during the year. And that was at the same time as boosting and improving our overall customer service and customer experience. I mentioned earlier about the rich recommended awards that we achieved for both energy and broadband, and I know those are just two examples. We're also consistently being rated at the top or towards the top of the Citizens Advice rankings, as well as the Institute of Customer Service rankings and the U Switch awards and the list goes on and on.

[Stuart Burnett, CEO at Telecom Plus]

And key to our continued progress here is our investment in AI and digitization, which is continuing to improve our efficiency and at the same time create some revenue generating opportunities. We're pushing forwards with our 20 fourseven AI powered WhatsApp knowledge assistance, which have been launched now for both customers and also for engaging with our partners. And we're already handling over 10% of customer queries through this channel, as well as around 5% of partner queries. And of course, there's much more to come. This is the tip of the tip of the iceberg for it.

[Stuart Burnett, CEO at Telecom Plus]

In addition to that, at the half year we talked about our Co Pilot tool, which listens to live calls between our customer service agents and customers, and then surfaces to the agent in real time the information or articles that they need in order to provide an accurate and speedy answer to the customer, which again is further improving efficiency and call quality. And then looking forward over the coming months, we're already working on using AI to drive revenue growth, as I mentioned. We're in a very early stage trial of how we can use machine learning to deliver increased conversion when we're doing cross sell, and we can already see some increased conversion coming through compared to traditional approaches. And in addition, in our partner channel, we've also launched a, again, sort of an early stage sort of version of that co pilot tool I mentioned that we're using in our call centers is a wingman tool called Ask Me to assist partners in sign up appointments. And on top of that, we've created a new churn model using AI, which is much better at predicting when customers might be at risk of churning, so we can then take action to attain them.

[Stuart Burnett, CEO at Telecom Plus]

That's something we'll be putting into action as we go through the year. So, again, in summary, a huge amount going on here, but even more to come. And it's really early days, particularly as we go on this sort digitization and AI journey. But we do feel like we have an emerging line of sight to aim at reducing our FTE per customer numbers over time as we scale by as much as 30 to 50%. So, a significant opportunity.

[Stuart Burnett, CEO at Telecom Plus]

And with all of that, hopefully you can see how our one of a kind multi service value and service proposition creates a product that's really worthy of recommendation. And that's exactly what our partners are for. Now, I'll move quickly through this slide. I think you've seen it before, but as a reminder, we've got over 71,000 partners who are ordinary people based all over the country, as you can see from from this heat map, who are, put simply, experts at recommending our unique model to their friends, their family, and people in their local communities. One way to think of them is sort of as micro influencers, whether in person at the school gates in the golf club, or online on Facebook or Instagram.

[Stuart Burnett, CEO at Telecom Plus]

Now, our partner model, as we've been talking about for a few years now, is increasingly of its time. And there were two really important tailwinds here. The first is about what you might call the work transition. Put very simply, there's now 20,000,000 people in The UK who have some form of second or third income on the go. These are people who don't want to do the nine to five, who don't want to do the the daily commute, people for whom our partner model is right up their street.

[Stuart Burnett, CEO at Telecom Plus]

So our partner model is increasingly closer to the modern way of working than a traditional nine to five opportunity. And then second of all, the pensions crisis, which I'm sure you all understand, which is tens of millions of households not saving enough for retirement and therefore facing retirement poverty. And our model, with its really important up front income, but critically, this long term sort of revenue share or sort of residual income approach really fits squarely into that gap. Now, at the half year, you might recall I shared a video which shows how right here, right now, some of our partners are using the UW opportunity to build this long term material income. But today, I wanted to share another video, which interestingly is over twenty years old.

[Stuart Burnett, CEO at Telecom Plus]

So please, I apologize in advance for the slightly poor film quality for it. But this was from one of our original training programs over twenty years ago.

Well, are really so many good things about the business, but for me personally, the best thing is the fact that I'm building up a residual income. Now, I currently work as a software engineer. It's a very well paid job, but I have a little boy, his name's Joe, he's got down syndrome and I have to work away from home. Joe always tells me how much he misses me and I really miss him when I'm away. So this business is going to allow me essentially to retire in one or two years time so I can spend my time at home with Joe.

So when he gets up to go to school in the morning, I can be there. When he comes home from school in the evening, I can be there. When he's on holiday, I can be on holiday.

[Stuart Burnett, CEO at Telecom Plus]

Now, that gentleman there was Tony Griffiths. And very sadly, Tony passed away last year. But because of UW, he was able to retire. He was able to spend more time with his disabled son, Joe, who needed his presence and support, and who Joe will continue, after Tony's passing, to benefit from his father's UW residual income. Because the residual income asset you build up as a UW partner can be willed to your family as just like a form of legacy.

[Stuart Burnett, CEO at Telecom Plus]

That is the power of the UW income model. Now, before handing over to Nick, there were a couple of final, some very exciting developments that I wanted to share and talk about briefly, about how we can acquire and drive even more leads into our partners and into our unique multi service platform. First of all, connectors. Now, we've been experimenting over the past year or so through a number of small trials about how we can link up small local businesses, community groups, organizations, clubs and charities with our partners, whereby these organizations can earn a new commission or income stream by introducing their customer base or their membership base to one of our partners, where our partners can then sign up those customers onto our multi service offer. Now, these trials have been a real success, and as a result, we've launched what we are now calling what we're now calling connectors.

[Stuart Burnett, CEO at Telecom Plus]

Now think of this as a new lead generation source for our partners. Know, if you're the average partner, you might expect that in your town, might know maybe 5% of the people, but all of the local small businesses, community groups, clubs, charities will collectively know pretty much everybody. So by putting in place this connector, model, partners will share 50% of their commission with the local business or local organization in exchange for the successful warm lead. And this creates a real win win between the partner, who gets this additional new source of leads from people in their local area that they may not have known or may not have come into contact with. And also for the local business, which generates a new income stream and also a deeper relationship with their own customers or membership base.

[Stuart Burnett, CEO at Telecom Plus]

In those early days, we launched this this connector program back in April. We've already signed up over a thousand connectors onto the program, and these range from everything from estate agents and hairdressers to local clubs and charities. And we're going be very excited to see how this develops over time. And then secondly, towards the end of FY twenty five, we agreed a partnership agreement with TalkTalk, who are our long standing broadband partner, under which we've acquired around 95,000 broadband and landline customers, with around 25,000 of those arriving at the tail end of FY twenty five and with the balance approaching 70,000 or so due to land during the new financial year, FY '26. Now, not only are these customers already serviced by the same underlying broadband technology that we have, which makes migrations sort of relatively straightforward, but by moving to UW, they'll of course benefit from our rich recommended broadband service and offering.

[Stuart Burnett, CEO at Telecom Plus]

But the key reason for the trial is to demonstrate how with our unique multi service offer, plus with our partner route to market, we can provide even better value to and create significantly enhanced value from these customers through cross selling our other services, energy, mobile, and insurance. Now, we're in the relatively early stages of exploring and trying a whole range of different cross sell opportunities with our partners at the center. And this is including matching our partners with customers who live near them, through using various prompts in the whenever we interact with these customers, through app engagement, when they call us into our call center, through outbound marketing trials, testing, learning, and improving as we go. And Once we've proven out the model, this will provide essentially what you can think of as a blueprint for us to acquire further books of customers, whether broadband or mobile or insurance or indeed energy, and whether through acquisition or through partnership. And sort of parts of customers who are not receiving a differentiated service from their current provider.

[Stuart Burnett, CEO at Telecom Plus]

We look out there and see large numbers of customers who are sort of stranded with a non differentiated provider where there's a demonstrable opportunity for us to acquire those customers and increase customer LTV through our model. Now, it's early days, so I don't have a detailed or numbers based update on how that cross sell trial is performing yet or indeed when the next opportunity might arise here. But what I can say is that we're seeing some early positive signs and we're quietly confident about how it's progressing. So watch this space. And so there you have it, the three key pillars of our unique business model, hopefully brought to life in a way which helps to explain why the business is performing so well and why we expect that to continue.

[Stuart Burnett, CEO at Telecom Plus]

And with that, over to Nick to talk through the numbers.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

Thank you, Stuart. So let's start with the with the p and l. Now as Stuart mentioned, adjusted PBT is up 8% to a £126,000,000, and that is driven primarily by the strong year on year organic customer growth, partly offset, as expected, by the much higher energy price cap level that there was in the prior year, particularly in quarter one of FY twenty four. Without that prior year quarter one energy price impact, FY twenty five adjusted PBT growth would have been more in line with overall customer growth. Now highlighting the main themes within the the p and l, revenues of just under 1,840,000,000.00 are 10% lower than the prior year, driven by energy prices returning from their higher levels as as just mentioned.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

And as we've said before, though, revenue is a KPI which is not particularly relevant as a driver of profit growth, and that's because the the energy commodity cost movement, are passed on, to customers via their bills. More importantly, these same effects feed into the gross profit, line, which is up year on year by 1% driven by customer growth, but meaningfully offset by those energy price reduction effects that that that we've mentioned. Admin costs decreased by 5% year on year, and that's with these efficiency initiatives significantly kicking in, together with some of the higher costs associated with customer service during the previous extreme energy price period no longer being being needed. And this resulted in a restructuring charge of 5,700,000.0, which has been excluded from the adjusted PBT view given its one off nature. Now as these initiatives develop, we expect admin expenses going forward to increase below the rate of customer growth in coming year.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

The bad debt charge as a percent of sales was 1.8% compared to an underlying 1.6% in the prior year when you exclude those energy price guarantee revenues from the government that we had in FY twenty four. That level's been been mainly driven, by the continued impact from the temporary moratorium, which was imposed by Ofgem in Feb twenty twenty three on those involuntary, installations of prepayment meters. Now although the moratorium has since been lifted, it will take time to to ramp up that those debt recovery processes back to back to previous, levels. There were higher interest costs, this year, given that in half one of the prior year, we benefited from the the temporary cash timing difference from the government's energy price guarantee scheme before that normalized by September 2023 in the in the prior year. And all this contributes to this adjusted PBT increase of 8% to a £126,000,000, with adjusted earnings per share increasing 9%.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

So if we now look at the the balance sheet key movements, you've got net current assets which are driven by working capital, and which I will cover off in more detail on the cash flow slide. You've got net debt improving slightly relative to the prior year end position by 7,000,000 to a £116,000,000, which results in a conservative net debt to EBITDA ratio of around 0.8 times. Now in terms of in terms of debt facilities, we increased our revolving credit facilities with with our banks by £30,000,000 to 205,000,000 and increased the maturity of these to November 2028. And we also increased our private placements from 75,000,000 which mature in 2030 by another 50,000,000 which mature in 02/1932. So that all in results in diversified total facilities of £330,000,000 relative to our net debt level of a £160,000,000, and that's to support our ongoing double digit annual growth plans of of the company.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

So moving on to the on onto the cash flow. The cash flow starts with an f y twenty five adjusted EBITDA of a £148,000,000. From that, there's a working capital outflow of £15,000,000, and that also includes a small final reconciliation true up benefit following the end of the energy price guarantee scheme, finished last year. The the typical working capital outflow expected across the whole year going forward, given our rate of growth continues to be around the 25 to £30,000,000 mark. You then have the tax charge and also CapEx of £17,000,000, which continues to be primarily technology development.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

And with all this and the payment of dividends, which in the prior year included £10,000,000 of of share buybacks before we move back to a 100% dividend payout approach, you you've got a small improvement in net debt by 7,000,000, as I mentioned previously, to to to a £116,000,000, the net debt to EBITDA position of 0.8 times. And that's in line, of course, with the the leverage of around one times, which we usually have. So if we now talk about capital allocation, you know, the backdrop continues to be that we have a capital light business model, given that this has low working capital requirements as we grow, and it has CapEx which is limited primarily to to technology development. So so that's what determines our progressive distribution policy where we maintain low leverage of around that one times net debt to EBITDA, but at the same time return between 80 to 90% of adjusted net income to shareholders via via dividends. And given that, you know, dividend growth last year was lower whilst we were returning money in the form of both share buybacks and dividends, now that we're returning solely to dividends, that the full year dividend growth for FY '25 will be over 13% to 94p. Stuart?

[Stuart Burnett, CEO at Telecom Plus]

Thank you, Nick. So we've now talked through our record operational and financial performance during FY '25. So now let's take a few minutes to look forward to the years ahead and our journey to our next big milestone of 2,000,000 customers and beyond. And as you can see on this slide, we have currently 3% energy market share and are the seventh largest energy supplier in The UK and the biggest independent challenger to the new big six. And of course, our market share is meaningfully smaller than 3% in our other services of broadband, mobile and insurance.

[Stuart Burnett, CEO at Telecom Plus]

So thinking ahead, when we hit that 2,000,000 customer milestone, we'll only have 6% energy market share based on this here, and we'll still only be the seventh largest energy supplier. So the question, to my mind, to our mind, is not about the size of the opportunity, but it's about our journey to delivering on it. And as a reminder on this slide, you can see our twenty five year journey so far to this point. Now, think you're all aware of some of the different dynamics that we've talked about in-depth in the past, so between the period 2008 to 2014 and then from 2014 to 2021. And now, having gone through the energy crisis, which cleaned out all of those unsustainable operators that entered the market, we're now, as we mentioned a few times, four years into delivering double digit net customer growth.

[Stuart Burnett, CEO at Telecom Plus]

And in this normalized marketplace, with our market leading customer proposition and tailwinds around our partner opportunity, we have a lot of confidence in our continued growth trajectory. So, what does this customer growth opportunity mean in terms of returns? Well, you can see on the right hand side of this chart our EBITDA per customer evolution over time, which has stabilized at around the mid-120s level since FY 2023. And in FY 2025, we again delivered EBITDA per customer in the mid 120s. Now in terms of the drivers and looking forward as we go on that journey to 2,000,000 customers and beyond, we can see a clear opportunity to further increase our EBITDA per customer from the 120s to the 130s, 40s and ultimately towards that 150 mark.

[Stuart Burnett, CEO at Telecom Plus]

And we've set out the key components of that on the slide, but on just to sort of break it in step through the gross profit and then the admin cost side of it. On the gross profit side of things, the main levers are in positive direction, first of all, improved supplier terms that come with greater scale and buying power. Second of all, selling additional higher margin services into our customer base and increasing multi service penetration through cross sell opportunities and also through adding new additional services into the mix. And also thirdly, by optimizing our pricing for overall returns. And then pulling in the other direction, of course, there's the there's the the headwind that comes from lower energy prices and also things like the reduced operating cost allowance in the energy price gap.

[Stuart Burnett, CEO at Telecom Plus]

Together, on the gross profit side of things, we see this as being worth 10 and maybe up to £20 of additional EBITDA per customer over time. And then, on the admin cost side of things, as mentioned earlier, we're scaled for growth, and whilst we delivered meaningful operating leverage improvements in FY 2025, there's real scope for more to come. And linked to this, we see real opportunities to come from our investments in digitization and AI. And then again, in the other direction, you've got the impact from things like employer increased employer national insurance contributions and the national living wage. And again, putting those together over time, we might see the admin cost opportunity as being again worth in the region of £10 to £20 or more.

[Stuart Burnett, CEO at Telecom Plus]

And so, bringing it all together in summary. In FY '26, we expect to deliver total customer growth again of around 15% with low double digit organic growth. We expect to deliver adjusted profit before tax in the range of £132,000,000 to £138,000,000 and a full year dividend increasing in line with our adjusted net profit. Now the profit before tax range is slightly behind customer growth as a result of the modest headwind that we see from the operating cost review that Ofgem has undertaken and the increase in national insurance contributions and national living wage, both of which we'll be looking, of course, to mitigate. And then when you look out further over the medium to longer term, so sort of think of this from FY 2027 onwards, We expect to continue building market share across all our services.

[Stuart Burnett, CEO at Telecom Plus]

And remember that there's really significant upward potential here, given that 2,000,000 customers with just 6% market share in energy. We expect to be building out our platform for these sort of subscription style services, adding further additional services into our platform across both insurance and financial services as well as in the energy as a service space. We expect to be opening up new opportunities. We've already talked about the talk talk across our partnership, which could be a blueprint for further transactions and partnerships as we prove out the model. And we see some powerful structural drivers leading to continued demand for our partner opportunity.

[Stuart Burnett, CEO at Telecom Plus]

And as all of these elements come together, we expect to be delivering continued growing shareholder returns with the opportunity to increase our EBITDA per customer over time. Thank you very much, everybody. Let's move on to questions. I think we've got a microphone to be passed around. So if you could pass that on to Charles to kick off the questions.

[Charles Hall, Head - Research at Peel Hunt]

Thanks. Charles Hall from Peel Hunt. Stuart, could you just talk a little bit about customer growth? And I think you're talking about organic growth, double digits. How are you thinking about the TalkTalk customers and the opportunity of cross sell?

[Charles Hall, Head - Research at Peel Hunt]

Does that come in as acquisition customers, organic growth? How do you think about it?

[Stuart Burnett, CEO at Telecom Plus]

Yes. No, that's a question. So obviously, we're guiding towards low double digit organic growth and total customer growth of around 15%. And that the difference between those two is essentially the balance of the customers that we've acquired from TalkTalk, so landing as we go through the course of this year. Obviously, we're going to be looking to cross sell to these customers as we go.

[Stuart Burnett, CEO at Telecom Plus]

And when if you think of these customers that we've acquired as being a bit like when you've acquired a lead, and they haven't engaged or made an active decision to join you, but once they've engaged with you and and taken additional services from you, they are much more that behavior and activity and that engagement is much more in the nature of an organic customer who's taken an active decision to join you. So we think of those customers as being organic in nature and the balance of customers who we've just acquired in and are sort of more sort of they are more maybe dormant in their behavior as being inorganic customers.

[Charles Hall, Head - Research at Peel Hunt]

Got it. And then can we just talk a little bit about the competitive environment? Last year, churn went up a fair bit, and obviously, that was partly due to timing on the energy price cap. But have you had to be more competitive on price as a result to offset that churn? And when you think about all the other products you're offering, are there any areas where you feel you're having to invest more in price to keep the customer growth going?

[Charles Hall, Head - Research at Peel Hunt]

Or is are we now in a sort of normal scenario?

[Stuart Burnett, CEO at Telecom Plus]

Yes. I mean I mean, it's whilst it's a rational environment, like I mentioned, and and everyone is is behaving sort of responsibly and rationally, Yeah, they're they're indeed are very competitive marketplaces, which is what they what they should be, and that's not something that we're sort of put off by or or afraid by. We lean we lean into that, into that. In terms of the the the two parts, in terms first of all of the sort of the the churn that you mentioned, that there there were a couple of sort of peaks of peak moments around around when the price cap was at its highest with a falling forward curve, therefore creating an opportunity for customers to move on to what appear to be very attractively priced fixed price energy deals relative to the current level of the price cap. Obviously, price cap will then come down and chase the forward curve down over time, so they won't realize the full perceived savings.

[Stuart Burnett, CEO at Telecom Plus]

But nonetheless, at that moment in time it feels like a good opportunity. And we saw that back in the sort of the September period, where the price cap rose and then the forward curve tailed off. And then the forward curve increased again leading to a higher price cap period that we're now in. And obviously the forward curve since then has been trending down other than over the last ten days where there's been where there's been obviously macro macro sort of geopolitical thing thing things at play. And both of those two moments in time led led to sort of sort of spikes in churn, and we've churn start to sort of trend down as we now approach the July when we when the price gap is due to due to to fall.

[Stuart Burnett, CEO at Telecom Plus]

In terms of price investment, probably there's there's two areas where we where we've been sort of have been investing in price. One is in fixed energy deals because that that that has been a competitive fixed energy market market out there. And that and that's an area where we are sort of happy to invest in price because at the moment, we've we've only historically offered fixed energy deals for multi service customers, and those are customers that we're happy to invest in. And the other area where we've been investing in price is we've launched a new broadband recontracting offer that I mentioned as well. And I know that again, we think is a really good an area where we're happy to invest because these customers are typically our some of our most long standing loyal customers and we want to make sure that we're treating them well.

[Stuart Burnett, CEO at Telecom Plus]

Both all of these marketplaces are competitive, but I'd say that energy and broadband are probably the two most competitive, and we've therefore been sort of making some further investments in pricing in those areas.

[Charles Hall, Head - Research at Peel Hunt]

And taking that through to EBITDA per customer, just doing the maths on the guidance, you've got EBITDA per customer coming down this year. I guess part of that is because the talk talk cross sells are only going to happen in the back end of this year. And you've also got some headwinds on costs. And do you see those as sort of just both temporary issues on that route to the potentially 150,000,000 in the medium term?

[Stuart Burnett, CEO at Telecom Plus]

Yes. I that's the right character characterization, obviously. You know, think things like energy price movements will be a thing that over over from year to year, there'll there'll be an impact from that up or up up up or up or down of sort of a modest a modest impact. The the exact rate of customer growth, the proportion of customers that we acquire through not just the TalkTalk deal, but any sort of further deals that we do once we've proven out the blueprints. I think the key thing is being understanding what these levers are there, and we will use them in the right way at the right time.

[Stuart Burnett, CEO at Telecom Plus]

Just because they're there doesn't mean we're going to pull them all at once. The key thing is making sure that we keep the growth trajectory going. And then I'd much rather pull the levers harder once we get to 2,000,000 customers and beyond, rather than pull those levers sooner and either slow or damage that journey to 2,000,000 customers, I think that's definitely the right balance in the way that we're thinking about it. The key thing is to know that they're there.

[Charles Hall, Head - Research at Peel Hunt]

Perfect. Thanks.

[Analyst]

Alex Smith from Berenberg. Just a quick one. You mentioned the size of the opportunity to kind of reduce admin costs and the potential efficiency gains from digitalization and AI. Could you maybe provide a bit of color specifically on where you expect those savings and maybe timelines from those savings given the investment in tech?

[Nick Schoenfeld, CFO & Director at Telecom Plus]

I can give a feeling of size. As we mentioned, our admin costs are around the sort of 5,000,000 mark. In terms of the people costs within that, it's approximately 70 to to 75%, so say, you know, approximately a 100,000,000 a £100,000,000. Now in terms of the, you know, ultimate efficiencies that we've been talking about, if you take the sort of 30, you know, the the lower end of that range, 30%, that would therefore be equivalent to about £60,000,000. The degree to which that feeds through into drops through the into an increase in PBT depends on the amount we choose or not to to reinvest in the in the product offer over time.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

In terms of time frame, we're not providing a time frame at this stage. It's to provide a sort of flavor of the opportunity as we progress over the years.

[Analyst]

Just one quick one on inorganic growth. TalkTalk, I guess, was the first step. I'm just wondering, has that opened doors to other services other than broadband? Have you been approached from other service providers post this TalkTalk acquisition?

[Stuart Burnett, CEO at Telecom Plus]

So the first thing here is, without question, sort of proving out the blueprint through doing the cross sell. But as I said, there are some sort of positive early signs that we're seeing from our sort of early activities there. But as we go through the year, we'll learn a whole lot more. Once we've done that, there are for sure going to be further opportunities we expect in broadband space. Across other services, well, the reason why broadband was an attractive starting point is because lots of businesses have tried selling or cross selling telecoms products into energy customers, and they found it they found it quite difficult, albeit they haven't had our our sort of developed multi service offer or our partner route to market to help them help them to do that.

[Stuart Burnett, CEO at Telecom Plus]

But but we believe that selling energy and other services into a broadband customer, is is is likely to be more productive because energy is a more simple service to switch and broadband is a more complex service for for for people to to to switch. That said, we think that having proven it out, will open up opportunities across the full range of different service lines. Obviously, where those opportunities come from will depend on all the usual things. And obviously, it takes two parties to want to do this. So finding a willing seller as well is obviously the key thing.

[Stuart Burnett, CEO at Telecom Plus]

But we do believe, as I mentioned in the presentation, that there are lots of I sort of think of them as like stranded customers. So customers that are there, they are just there in the hands of a, of of a supplier, a single service supplier providing them with a fairly generic service experience. It's not better value, it's not a better service, they're sort of slightly lost. And I think that we can we've got a way to create value from that in a way that other people don't.

[Analyst]

Yes. Quick one for me. Stuart, you've mentioned early positive signs twice now. On TalkTalk, can I just encourage you to be maybe a little bit more specific, both about that positivity, but also a year from now, what would good look like in terms of the potential penetration within that top top book?

[Stuart Burnett, CEO at Telecom Plus]

Yes. So it's I'm not going to give any numbers in terms of more detail on the positivity. What I can say to flesh it out a little bit is that we're trialing a whole range of different things, lots of small trials with small cohorts of customers. And some of those trials that we've done have started to deliver conversion rates sort of in line with our expectations, some slightly below our expectations and some slightly above our expectations. But if you've got any of your little trial samples with a cohort that's delivering something that's slightly ahead of your expectations, then you might, then we've got this belief that we'll be able to double down on that particular approach and build out that particular approach and roll that out to the other cohorts, and therefore deliver a strong outcome.

[Stuart Burnett, CEO at Telecom Plus]

Yeah, we can do lots of different we can do lots of all the trials that we're doing, we're sort of iterating on a pretty much daily basis with how we're doing it. But we're also doing very small scale trials before we sort of roll it out at a larger scale. We're not in a rush to do it either. We are it's important to make sure that we migrate and onboard these customers in a really positive way, that they that we warm them up, that they get introduced to a a new business and a new business model. So we're not we're not in a in a rush.

[Stuart Burnett, CEO at Telecom Plus]

I think it's very much making sure that we and some customers don't want to move that quickly. They want to check, okay, let let let's see how my broadband experience goes with you over the first period of time. I like the sound of the additional services. In six months' time, if everything's gone well, then let's have a conversation then. So so there'll be a whole range of different different different types of customers within it within it as well.

[Stuart Burnett, CEO at Telecom Plus]

I I think that the measure of success ultimately is going to be us having the confidence as we go through the year to perhaps actively explore additional opportunities in this space. That's ultimately the litmus test of us delivering what we wanted it to deliver.

[John Karidis, Director at Deutsche Numis]

So John Corridis from Deutsche Numis. A few questions, please. Can I just confirm that the 10% to 15% yearly customer growth on the way to £2,000,000 is that organic only? Or is it likely to be a mix, organic and inorganic, per annum going forward?

[Stuart Burnett, CEO at Telecom Plus]

That that that's it, that's a useful a useful lay down to think about going forward. Obviously, it will depend on what opportunities present themselves and the extent to which we're able to cross sell using our partners into those opportunities. Obviously, for every bit of activity that we're steering our partners to do to cross sell over on the right hand side might take them away from doing something that they otherwise would have been doing over on the left hand side. And so there will be like an interplay of sorts between the amount of cross sell that we do and what you might call the sort of the more sort of natural historic organic growth that we've delivered. So I think it's too early to sort of be, hopefully understandable reasons, to be sort of too fine tuned about how it might play out in over a multiple year period.

[Stuart Burnett, CEO at Telecom Plus]

But hopefully, that gives you enough of like a lay down of how we're thinking about it.

[John Karidis, Director at Deutsche Numis]

Thank you. Yes. Then in terms of the exceptional admin cost to do with the energy crisis, I guess I have two questions. The first one is the assumption was that you sort of rent out call centers somewhere overseas. I'm not quite sure why that would result in exceptional restructuring costs at the end of it.

[John Karidis, Director at Deutsche Numis]

Did you sort of end the contracts earlier? And then sorry, related to that, how much of this exceptional cost is left in the £144,000,000 or whatever the number was? And what's the timing of that moving out, please?

[Stuart Burnett, CEO at Telecom Plus]

So first of all, going through the energy crisis, was a number of things that we did as we both were returned to double digit growth, but also dealt with all, like, the the inbound contact that customers were were were giving. Like like, people were were were terrified about what was going on with their energy bills, and so we we received disproportionate amounts of contact. We we did a whole range of things, including significantly scaling up our employed workforce to deal with that, as well as taking on outbound expensive, predominantly onshore contact center support as well. That onshore contact center support is something that is it was has broadly washed through the system before last year. What was in the last year was amongst other things, us beginning the process of normalizing our core employee base as we as we go through that.

[Stuart Burnett, CEO at Telecom Plus]

Going going going forwards, I I think how it's it's quite difficult to say how much of that is still left because so many other things are changing. Because because of the progress we're making on digitization and AI, we've got just a different view now of how much you how much how much resource you need to provide a great experience to people. So if you'd asked us a a year or two ago, we'd probably we'd probably have said that there wasn't that much additional sort of over investment to to to recover. If you asked us now, I think we'd say that there is, but it's for slightly different

[John Karidis, Director at Deutsche Numis]

Yes.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

I think the question on the £5,700,000 is probably, has the cash has the cash been paid out? And the answer is pretty much predominantly it has.

[John Karidis, Director at Deutsche Numis]

Right, in FY 2025.

[Nick Schoenfeld, CFO & Director at Telecom Plus]

In FY 2025.

[John Karidis, Director at Deutsche Numis]

Okay. And then lastly, there are sort of recurring headlines about talk talk going bust. So in that scenario, I'm sure somebody will come in and pick up the pieces. But would you incur exceptional costs? I don't know, would you have to change the routers, for example, as a consequence?

[John Karidis, Director at Deutsche Numis]

So if that were to happen, what would be sort of the worst case scenario for Telecom plus please?

[Stuart Burnett, CEO at Telecom Plus]

So our contract with it's actually with technically speaking, it's with PXC, which is the sort of like platform sister company of Talk Talk Retail, but all under the sort of the overall sort of Talk Talk Talk umbrella. And our talk to our contract with them is a profitable cash flow generating contract for them, and therefore will be valuable asset for whoever if if the scenario that you painted was to was to was to arise, our relationship will be a valuable asset that whoever picked up the pieces would absolutely want to want to hold on to. And if they didn't, and if they weren't able for whatever reason, there's other people, because we've had we've had regular interest in people who sort of would covet our our our broadband business. So our our expectation is is is that that, like you say, first of all, they're because of the fact that they've got, however many, there's two two point something million customers that would need to be looked after, it would need to be management of that situation would need to be orderly and have the customer situation at heart. And we'd expect that we would end up being sort of a very valuable part of whatever the resolution is and any new ownership would want to really look after us.

[John Karidis, Director at Deutsche Numis]

And just so if I were to buy it, would you have to change your routers? Or would you ask me to weigh the cost of that if I needed to do that?

[Stuart Burnett, CEO at Telecom Plus]

I think it would depend on exactly who depend on who bought it and on what sort of migration was needing to be planned, if any, from what network to what network over what time frame. And so it's quite a whole range of factors. But as I said, the key thing is to understand is the customers will need to be looked after, so therefore they'll need to be an orderly sort of an orderly process. And we're probably the crown jewel part of that sort of relationship and would be expected to be heavily sort of fought over by the whoever was involved in picking up the pieces.

[John Karidis, Director at Deutsche Numis]

Thank you.

[Stuart Burnett, CEO at Telecom Plus]

Great. Maybe one more question and then I think we have to wrap up.

[Andrew Ford, Research Analyst at Peel Hunt]

Thanks Stuart. Just a quick one for me. It's Andrew Ford from Peel Hunt. Just on the customers, so there's obviously there's more two than three on the customer sign ups. I just wondered if there was anything more underlying in there which with yes, sorry, I've got a nosebleed.

[Andrew Ford, Research Analyst at Peel Hunt]

Anything more underlying in there from a customer service perspective that's changed from a mix perspective or anything else?

[Stuart Burnett, CEO at Telecom Plus]

Yeah. I think it's a combination of points that I mentioned in the presentation. It's in part the fact that we didn't have insurance available during a large part of the year for new customer sign ups. It's in part we made changes, actually, as we went sort of came out of the energy or as we were going through the energy crisis, to make our it easier to get great value from us by just taking two services, whereas in the past, the only way and that's because we could. Whereas before that, the only way that we could compete with some of the irrational pricing in the marketplace was providing three customers, three services plus to to to you as we reinvested the additional margin from those from all the services into the energy price during that period.

[Stuart Burnett, CEO at Telecom Plus]

So that for sure would have had a diluting effect on the number of services per customer. And then the third and final thing, which is important to overlook is also an increase in mobile only customers. But also, now with addition of the talk talk customers that came in, we had 25,000 sort of essentially broadband only customers that landed during the year as well. And as we look to the New Year, we're obviously going to have 70,000 or so. So the balance of the customers that we bought, of the broadband only customers that can be landing in FY twenty six as well.

[Stuart Burnett, CEO at Telecom Plus]

So that will have an impact on that sort of mix as we look forward. Great. I think that takes us to time, so let's wrap up quickly. I think the place to wrap up is back where we started on the three key takeaways. So first of all, as a reminder, our double digit growth performance is underpinned by those three key strands of our business model, which enable us to sustainably outcompete as we go on our journey to the 2,000,000 customer mark.

[Stuart Burnett, CEO at Telecom Plus]

Second, for FY 2026, we expect total customer growth of 15% with low double digit percentage organic growth, adjusted PBT between 132,000,000 and 138,000,000, and full year dividend increasing in line with adjusted net profit. And as we head towards that 2,000,000 customer mark over time, we see a real opportunity to increase our EBITDA per customer. And then third, we've opened up a new and exciting opportunity to acquire and drive further leads into our multi service platform through this partnership that we put in place with TalkTalk, and we really expect that to, provide a blueprint for further inorganic and partnership opportunities in the future. Thank you very much, everybody.

Participants

Executives

• Stuart Burnett, CEO
• Nick Schoenfeld, CFO & Director

Analysts

• Charles Hall, Head - Research at Peel Hunt
• Analyst
• John Karidis, Director at Deutsche Numis
• Andrew Ford, Research Analyst at Peel Hunt