UPDATED: KCOM enjoys ‘encouraging’ start to new financial year

Bill Halbert the CEO of KCOM Group
Bill Halbert the CEO of KCOM Group
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COMMUNICATIONS company KCOM Group said it had enjoyed an encouraging start to the new financial year and the business is trading in line with expectations.

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.