Thus remains cautious as revenue increases

Thus said it was experiencing increased demand for new generation services but remained cautious about the UK telecoms market as it said it expected a 10 per cent rise in revenue for the year.

The alternative network operator, which has yet to turn a full-year profit, said in a year-end trading update that it expected revenue for the year to March 31 to exceed £370m. Earnings before interest, tax, depreciation, and amortisation (EBITDA) and before exceptional integration costs are expected to rise by 5 per cent to £40m. The company will also generate its second successive year of positive free cash flow.

Last month, Thus, which lost out in its £800m bid for much larger rival Energis to Cable & Wireless in September, agreed to acquire Your Communications, the telecommunications business of United Utilities, for £59m and Legend, a business-to-business internet service, for £11.5m. The deal is expected lift revenues by more than 50 per cent to more than £500m.

Thus said on Thursday that it was confident of delivering savings of £25m annually upon full integration of the acquisitions and that it would incur a one-off cost of £30m, including £10m this financial year.

The company said it has experienced stronger demand for its next generation IP-based services, but revenue from dial-up internet and traditional voice services continued to decline as expected.

Similar to other telecoms carriers, Thus has been subject to a fierce price war in a sector with overcapacity, and at the same time has had to deal with technological change, which is seeing traditional switching technology replaced by more efficient and flexible networks based on Internet Protocol technology.

Thus said it remained cautious on the market and pricing for telecoms in the UK, but trading for next year remained in line with its expectations.

Thus shares were flat in early morning in London.