April 17, 2019 / 6:44 AM / in 2 days

Telecom Plus warns on profit hit after Ofgem price cap, sees 2020 rebound

(Reuters) - Telecom Plus Plc on Wednesday warned that full-year profit would lower-than-expected, after revenue in the fourth quarter was hurt from a price cap put in place by Britain’s energy regulator and higher acquisition costs.

Adjusted profit before tax for the financial year ended March 31 is expected to be towards the lower end of its prior forecast of about 56 million pounds, the company said.

Telecom Plus reported an adjusted profit before tax of 54.3 million pounds in 2018.

Shares of Telecom were down 2.8 percent at 1448 pence by 0713 GMT.

The company, which provides mobile, gas, electricity as well as landline and broadband services, said it expects earnings to rebound in 2020 as it tacks on more customers and sees better gross margins from reworked supply arrangements with npower.

The FTSE 250-component reported a 4 percent rise in annual customers for 2019 and expects those numbers to increase to 5 percent next year.

Telecom Plus said it expects adjusted pretax profit of 60 million to 65 million pounds for 2020.

The utility industry was hit by a price cap, but Britain’s Ofgem in February allowed suppliers to increase bills by more than 10 percent from April 1, after several of them complained that the cap was initially set too low.

Telecom’s customers include PG&E Corp, Alphabet’s Google, T-Mobile US and Sprint Corp.

Net debt at the end of the financial year more than tripled to about 38 million pounds from last year, but the company said this was due to several one-off costs, including spending more on phasing some energy industry payments and rolling out smart meters.

Reporting by Shashwat Awasthi and Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr

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