KCom hails Phones4U deal as sign of progress

The Hull-based group, formerly known as Kingston Communications, added it continues to perform in line with expectations, with good cash generation helping it to a stronger performance. "This performance is underpinned by the continued resilience of our Kingston Communications business, and is benefiting from the improving performance of our managed communications business, KCom," it said.

The group's domestic telecoms arm, Kingston Communications, provides the Hull area with phone and internet services, while managed communications links big businesses and organisations nationally. Last year the group signed a 10 year tie-up with BT, which allows it access to BT's national network.

It said the five-year Phones4U agreement shows the scope to win more lucrative contracts following the BT deal. KCom will consolidate the retailer's telecoms, providing services including internet, conferencing and store networking.

"Our contract win with Phones4U is as an example of our strategy of focusing efforts on higher value added services, contracted on a multi-year basis," said executive chairman Bill Halbert.

But analyst Andrew Darley at brokerage FinnCap: "We remain troubled by the ability to grow profitable revenue streams at a sufficient pace to counter the exit from lower margin revenue streams."