Telecom Plus PLC (LON:TEP), trading as Utility Warehouse, an integrated and unique platform for bundling subscription-style essential household services in the UK, today issues a trading update for its financial year ending 31 March 2026 (FY26).
Trading highlights
● Organic net customer growth of 10.3%, with total net customer growth of 23.3% (including broadband customers acquired from TalkTalk)
● Cross-sell trial into the acquired TalkTalk customers continuing to perform strongly with 14.5k customers upgraded and cross-sold to date
● Adjusted profit before tax for FY26 is expected to be at the bottom end of our previously guided range of £132m-£138m, following reduced energy consumption during an unseasonably warm winter
● Continued strong interest in our unique Partner income opportunity, with Partner numbers increasing to 77k
● Winner of Best Value for Money at the uSwitch 2025 Energy awards, together with 2025 Which? Recommended Provider awards for Energy and Broadband
Financial
Adjusted pre-tax profits for FY26 are expected to be at the bottom end of our previously guided range of £132m-£138m, following reduced energy consumption during an unseasonably warm winter.
We anticipate the FY26 year-end leverage ratio to be around 1.0x net debt/adjusted EBITDA, including the consideration for acquiring the TalkTalk customers, demonstrating our robust balance sheet and strong underlying cash generation, notwithstanding continued strong organic customer growth.
In response to feedback from many shareholders, we have decided to review our shareholder distribution policy. We intend to maintain a total payout ratio of at least 80% of adjusted profit after tax, but this will, from our upcoming full year results in June, now be split between both dividends and share buybacks, with at least 50% of the total payout each year being allocated to ordinary dividends and the remainder being allocated to either share buybacks or special dividends, depending on whether the Company is able to repurchase shares at below their fair value. This revised policy recognises the cash generative nature of the Group and its strong balance sheet and reiterates our commitment to maximising total shareholder returns.
Trading
Customer numbers increased by 23.3% to 1.43m (FY25: 1.16m), including 193k fixed-line/broadband customers acquired from TalkTalk as part of a cross-sell trial partnership. Organic customer numbers continued their double digit growth trajectory, increasing by 10.3% to 1.26m (FY25: 1.14m)[1].
The total number of services we provided increased by 12.1% to 3.80m (FY25: 3.39m). Organic service numbers increased by 7.6%[2] during the year.
Despite a 29% increase in Mobile services, our overall organic services growth rate during FY26 was behind our customer growth rate, primarily reflecting continued strong competitive activity in the Energy and Broadband markets, resulting in lower than expected growth in Energy and organic Broadband services (1.8% and 3.8% in FY26 respectively), whilst Insurance services (-8.3% in FY26) have been slower than expected to recover from the temporary pause in new Insurance sales during FY25.
Our churn rate increased slightly to 14.2% (FY25: 13.7%), reflecting the competitive dynamics mentioned above, with the shape of the energy wholesale forward curve enabling competitors to offer fixed price energy tariffs meaningfully below the Ofgem price cap for much of the year.
Macro-economic pressures and longer-term structural trends (such as the work transition and the pensions crisis) continue to provide a favourable backdrop for new Partner recruitment and engagement. Partner numbers increased to 77k (FY25: 72k) with an encouraging increase in monthly active Partners during the second half of the year.
TalkTalk update
The customers acquired from TalkTalk increased our broadband services by 193k. These customers are expected to generate a return above post-tax WACC, even without cross-selling any other services to them.
160k of these had been migrated onto our systems by year end, with the remainder expected to migrate by the end of the first quarter of FY27. Initial cross-sell results are continuing to perform strongly, with 14.5k customers upgraded and cross-sold during the year.
Looking forward
We have now delivered compound double-digit percentage organic customer growth across a range of market conditions for close to five consecutive years, and we remain focused on our medium-term target of increasing our customer base to two million households and beyond.
While recent competitive dynamics have impacted services per customer and our churn rate, our unique platform and word-of-mouth route to market remain a proven model for delivering high quality, multiservice customers at scale, generating a long-term source of growing, recurring, subscription-style revenues. In addition, our wholesale energy supply arrangements continue to insulate us from the current energy market volatility caused by events in the Middle East.
Our focus is on progressively increasing services per customer, reducing churn, growing contribution per customer, and enhancing customer lifetime values, in order to maximise long-term shareholder value. As a result, we are currently considering a number of potential initiatives to achieve these goals; we will provide an update on the outcome of this review together with our full year results for the financial year ended 31 March 2026, which we expect to announce on 23 June 2026.
Stuart Burnett, Telecom Plus CEO said:
“We have now delivered a fifth consecutive year of record customers, services and profits, all through helping households to save time and money via our unique, subscription-style, essential services platform.
Our annual Partner sales conference took place earlier this month, attended by a record number of Partners, and we launched a number of changes to our customer proposition designed to improve the quality of new customers gathered over the coming months. With our Partner income opportunity increasingly of its time, we remain focused on growing our business to supplying two million households and beyond over the coming years.
We look forward to providing an update in June on our plans to support more households with even more services, in order to maximise long-term shareholder value.”
