UPDATED: KCOM enjoys '˜encouraging' start to new financial year

KCOM reported that its fibre deployment in Hull and East Yorkshire remained on schedule to reach 150,000 premises, representing approximately two-thirds of its “addressable” market, by December 2017.

The group also said it was continuing to see high levels of customer take-up.

The company made the comments in a trading update to accompany its annual general meeting, which was held in its home city of Hull.

The statement added: “In Enterprise, having strengthened our sales, delivery management and technical capability, we are able to respond quickly to customer demand using a scalable operating model that can expand as demand grows.”

The board said it was confident the transition of KCOM into a provider of regional fibre-based services and complex IP (internet protocol) services to the enterprise market will, in time, lead to a re-rating of the company’s valuation.

The statement added: “As previously indicated, whilst we expect to make further progress in both Hull and East Yorkshire and Enterprise, as we transition away from commoditised services, we expect there to be a decline in revenues and margins associated with our legacy activities.”

In a note, analysts from Peel Hunt described it as a solid trading update.

The note said there were no numbers, but there was a positive commentary from its Hull and East Yorkshire telecoms network, which is on schedule and has achieved continued high customer take-up.

With regards to KCOM’s enterprise division, Peel Hunt said: “With deals such as HMRC, BUPA, and RDG under its belt, KCOM has used these as proof points to gain new contracts in the period from C Hoare & Co, Dugout, and Hastings Direct.”

KCOM can trace its roots back to 1904, when the Hull Telephone Department opened its first telephone exchange at 7 Wincolmlee, the former site of a public baths.

In 1999, the Kingston Communications Group, as it was then known, made its debut on the stock exchange with a partial flotation.

The shareholders of Kingston Communications (HULL) PLC voted to change the company name to KCOM Group PLC in 2007. Hull City Council sold its remaining stake-holding in the business.

Five years ago, KCOM began the deployment of its ultrafast fibre broadband service, KCOM Lightstream in Hull and East Yorkshire.