Internet firm KCom reveals profits drop - after thousands of customers cut off over weekend

KCom’s chief executive Bill Halbert said the network is now stable and the fault has been cleared following the weekend’s disruption.

“It was a hardware related failure by one of our suppliers. The first thing we had to do was to get people back up and running and we’ve done that,” he said.

“We are now working with the supplier in order for them to identify the problem. We understand what happened, but not what caused it. Only when we have the answers will I be able to say why it can’t happen again.”

The disruption first started on Saturday and Hull-based KCom said it was an intermittent problem and was not concentrated on any particular area.

Mr Halbert said that the firm is pushing boundaries with its fibre deployment.

“It puts increased pressure on the core network, but we are doing that for a good reason. We are taking fibre to the home or premises and we are seeing good take up, well in excess of the rest of the market,” he said.

He was speaking as the firm announced an expected fall in profits and sales following a shift away from commodity business.

Revenue fell 7 per cent to £165m in the six months to September 30 and pre-tax profits were down 28 per cent to £17.7m.

The group said it has made progress with its strategy, shifting the focus in the Enterprise operation towards high value integration and cloud based solutions and it has accelerated fibre deployment in Hull and East Yorkshire, with market leading take-up.

The business has been integrated behind a single brand, KCom.

“Since we rebranded under the single brand name KCom, we are becoming a clear leader in the market,” said Mr Halbert.

The group said its banking facility has been extended and announced an interim dividend of 2.00p, up from 1.97p, adding that it will pay out no less than 6.00p for the full year, both this year and next year.

Analyst Andrew Darley at FinnCap said: “KCom’s interims show a focus on the continuing transformation of the business, in cost and investment, and to operate under a single brand. The benefit of the cash injection from the network sale has led to the opportunity for significant investment both in the Hull and East Yorkshire division and the nationwide Enterprise division, to create a platform for growth.

“With a reiterated commitment to a minimum 6p dividend for 2017 and 2018, ongoing cost saving initiatives, and proof of customer enthusiasm for the integrated platform which investment will further support, KCom continues to deliver an attractive dividend in anticipation of its return to headline growth.”

He reiterated his share target price of 130p.

Mr Halbert said it will take a couple of years before profits and revenue increase again.

“We did expect a step back this year. We are confident about the future,” he said.