KCOM flags higher earnings and lower revenue for full-year

Local telecoms monopoly KCOM Group shares fell marginally in late trading on Monday, after the company issued an update on trading ahead of the capital markets day it was set to host on 1 February.

The London-listed firm said it remained “on track” to deliver an overall EBITDA performance that is slightly ahead of the board's expectation, and a revenue performance slightly behind, for the financial year to 31 March.

It said its Hull and East Yorkshire operations continued to enjoy a successful year, with revenue tracking in line with the board's expectations.

EBITDA for the period was set to benefit from a multi-year rebate on hereditament relating to the Hull and East Yorkshire network infrastructure.

“In December, we achieved our target of making fibre available to 150,000 premises,” KCOM’s board said in its statement.

“We have now started the second wave of our fibre deployment to make it available to the remaining premises in our addressable market.

“Fibre take up remains strong and we expect by the end of February to reach a point where more of our broadband customers are taking the service on fibre than on copper ADSL.”

The group also announced that Gary Young, the executive vice president responsible for Hull and East Yorkshire, was leaving the group to pursue another opportunity.

A process to find his successor was underway, and Young would remain with the business whilst an orderly handover of his responsibilities took place.

In its Enterprise operation, KCOM said its service contract with NFUM had been renewed and extended to include the provision of additional cloud services.

In December, the company was selected by an unnamed large automotive manufacturer to develop a platform solution using its ‘cloud native’ skills.

Also in December, it signed a 12 month extension to its contract with HMRC, taking that contract through to 2020.

“As recently reported by the Public Accounts Committee, HMRC is re-phasing the timeline for its internal transformation programme and we expect this re-phasing to have a negative impact on project-based revenue for Enterprise in the final quarter of this financial year,” the board noted.

That, together with delays to the finalisation of certain contracts, was expected to have a flattening effect on revenue and consequently reduce EBITDA performance in Enterprise for the full year compared to last year.

The board said it did not expect those factors to affect the long-term growth prospects of the segment.

Its National Network Services operation continued to perform in line with the board's expectations, and the company maintained its view that revenue and EBITDA would begin to stabilise there going into next year.

“We continue to execute against our strategy, bringing fibre to the final corners of Hull and East Yorkshire, refining our propositions in Enterprise and winning the trust of new and existing customers, and managing National Network Services for value,” said KCOM chief executive Bill Halbert.

“I would like personally to thank Gary Young for his significant contribution to our group.

I've worked closely with Gary over the past 6 years, a period in which he has led successfully our Hull and East Yorkshire business and overseen our successful deployment of fibre broadband.”