Sector spotlight: fixed-line communications

In this weeks' sector spotlight, I take a look at fixed-line communications.

Article updated: 5 August 2020 11:00am Author: Michael Baxter

These days making a phone call is almost free —indeed, it often is. You can ring by Whatsapp, FaceTime or have conference calls by Zoom.

Not so long ago, voice over IP ( VoIP), was a hot topic, but such technology seemed distant.

Nowadays it is so common we don't even use the acronym anymore. It's is like electricity— you don't say 'turn on the electricity' you say 'turn on the light.' You don't say 'I'll VoIP you'. Instead, you say 'let's do a Zoom.'

It has been a period of extraordinary change for fixed-line telecommunications. The traditional business model has been turned upside down.

But the calls aren't really free, of course. We pay a monthly fee for our internet instead — it's still good value if you don't mind me saying so.

So let's take a look at the key players and some numbers.

AdEPT Technology Group

AdEPT Technology Group plc is one of the UK's leading COMMS integrators. It is the only recommended supplier to Public Sector bodies and Registered Charities for calls, lines, broadband, super-fast fibre broadband and SIP trunks under the ESPO Telecom Framework Contract 7. It is one of only a small number of companies approved to sell to UK Universities and Colleges under the JANET Framework.

And public sector bodies need the services described above — it is fundamental.

In its latest year, to the end of March, revenue increased by 20%, but pre-tax profits were down 16%.

Company chair Ian Fishwick said: "Whilst it is still too early to provide guidance for the year considering the constantly changing landscape of the pandemic we are heartened by the excellent performance of the AdEPT team, as reflected in these key indicators, during these challenging times,"

Share price 244p
2020 high 360p
2020 low 167p
5 year high (2018) 410p
All-time high (2006) 410p
Change last 12 months -34%
Change last 5 years -2%
Change since 2006 51%
Market cap £61m
Yield 4
P/E 60
Revenue growth since 2015 113.8%
Pre-tax profits growth -31.0%
Total assets/total liabilities 1.3%
Current assets/total liabilities 0.4%
Current assets/current liabilities 1.6%
Net assets £18m

BT

There was a time when BT seemed like a truly exciting company — rich in smart engineers; it felt like it might flourish in the internet era. Okay, don't be too disheartened by the long-term share price performance, if you had bought before the peak, you would have benefited from the sale of Freeserve.

And maybe, just maybe, part of its underperformance these last two decades has been down to the regulator.

The Share Centre rates it as a hold, that pretty much says it all — from a financial and share price performance point of view it feels like it has been on hold for two decades.

Share price 108p
2020 high 196p
2020 low 101p
5 year high (2018) 500p
All-time high (2006) 1053p
Change last 12 months -44%
Change last 5 years -77%
Change since 2006 -14%
Market cap £10,352m
Yield 14
P/E 6
Revenue growth since 2015 -4.8%
Pre-tax profits growth 0.0%
Total assets/total liabilities 1.4%
Current assets/total liabilities 0.3%
Current assets/current liabilities 1.1%
Net assets £14763m

Talktalk

Talktalk provides voice and data services to consumers and small to mid-sized enterprises in the UK.

It recently confirmed that it had turned down a bid for the company from an investor Toscafund that would have valued it at £1.5 billion.

Talktalk is known for providing low-cost internet access. I wonder about the importance of low cost in this business. The fact is the internet is worth a lot more to me than the few pounds a month I pay.

Share price 71p
2020 high 122p
2020 low 71p
5 year high (2018) 323p
All-time high (2006) 403p
Change last 12 months -32%
Change last 5 years -76%
Change since 2006 -44%
Market cap £809m
Yield 3.54
P/E 5
Revenue growth since 2015 -14.5%
Pre-tax profits growth 835.7%
Total assets/total liabilities 1.3%
Current assets/total liabilities 0.2%
Current assets/current liabilities 0.6%
Net assets £406.0m

Telecom plus

A fully integrated provider of a wide range of utility services. It supplies gas, electricity, landline, broadband and mobile services to residences and businesses. 

Telecom plus owns the Utility Warehouse brand which provides homes and small businesses throughout the UK with, home phone, mobiles, broadband, gas and electricity.

The Share Centre rates it as a buy. When I look at its yield, strong balance sheet, profit and revenue growth, I can see why The Share Centre is so positive.

Share price 1342p
2020 high 1550p
2020 low 981p
5 year high (2018) 1550p
All-time high (2006) 41891p
Change last 12 months 1%
Change last 5 years 11%
Change since 2006 585%
Market cap £1,057m
Yield 4.26
P/E 29
Revenue growth since 2015 18.4%
Pre-tax profits growth 17.1%
Total assets/total liabilities 1.9%
Current assets/total liabilities  0.9%
Current assets/current liabilities 1.5%
Net assets  £222.0m

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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