| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 856.88 | -36 |
| Intrinsic value (DCF) | 925.19 | -31 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
Telecom Plus Plc (LSE: TEP), operating under the Utility Warehouse and TML brands, is a leading UK-based multi-utility provider offering bundled services including gas, electricity, broadband, mobile, and home insurance. Founded in 1996 and headquartered in London, the company has carved a niche in the competitive UK utilities market by leveraging a unique multi-service discount model that rewards customers for consolidating their utility needs. As a member of the FTSE 250, Telecom Plus serves over 800,000 customers with a focus on cost savings, convenience, and cashback incentives. The company operates in the Diversified Utilities sector, differentiating itself through its partner-led distribution network and strong customer retention rates. With increasing demand for bundled utility services in the UK's cost-conscious market, Telecom Plus is well-positioned for growth in the evolving energy and telecom landscape.
Telecom Plus presents an attractive investment case due to its resilient bundled utility model, strong customer retention, and defensive sector positioning. The company's FY2024 results show steady revenue growth to £2.04 billion, with net income of £71 million and a generous dividend yield (84p per share). However, negative operating cash flow (-£132.5 million) raises liquidity concerns, though this is partially offset by £57.8 million in cash reserves. With a beta of 0.53, the stock offers lower volatility than the broader market, appealing to income-focused investors. Key risks include regulatory changes in the UK energy market, intense competition from larger utilities, and potential margin pressure from wholesale energy price fluctuations. The partner-led distribution model provides cost advantages but limits direct customer control.
Telecom Plus competes in the UK's crowded utilities market through its unique multi-utility bundling strategy and partner network. The company's primary competitive advantage lies in its ability to offer cross-service discounts that single-service providers cannot match, creating switching costs that enhance customer retention. Its cashback rewards program and white-label insurance products further differentiate the offering. However, the company faces significant scale disadvantages compared to integrated energy giants like Centrica and SSE, which benefit from generation assets and nationwide infrastructure. In broadband and mobile, Telecom Plus must compete with deep-pocketed telecom providers like BT and Virgin Media O2. The partner-led distribution model reduces customer acquisition costs but limits brand control compared to direct sales channels. While the bundled approach provides revenue diversification, it also exposes the company to multiple regulatory environments across energy, telecom, and financial services. Telecom Plus's smaller scale makes it more nimble than legacy utilities but potentially less resilient during market disruptions. The company's focus on cost-conscious consumers provides stability during economic downturns but may limit premium service opportunities.