Telecom Plus Trading Update: Record Customer Growth and Revised Payout Policy

Telecom Plus FY26 trading update: strong Utility Warehouse customer growth, softer profit outcome

Telecom Plus has delivered another year of customer growth, but this update is not a clean sweep. The headline numbers are good: customers, services and Partner recruitment all moved higher. The wrinkle is profit, with adjusted profit before tax now expected at the bottom end of the previously guided £132m-£138m range after an unseasonably warm winter reduced energy usage.

For retail investors, that makes this a broadly positive update with a couple of real caveats. The business is still growing well, the TalkTalk customer deal looks to be helping, and shareholder returns are getting a tweak that should please income investors. But competition is clearly biting in energy and broadband, churn is up, and services per customer are not growing as fast as management would like.

Key Telecom Plus numbers from the FY26 trading update

Metric	FY26	FY25
Total customers	1.43m	1.16m
Total customer growth	23.3%	Not disclosed
Organic customers	1.26m	1.14m
Organic customer growth	10.3%	Not disclosed
Total services	3.80m	3.39m
Total service growth	12.1%	Not disclosed
Organic service growth	7.6%	Not disclosed
Churn rate	14.2%	13.7%
Partner numbers	77k	72k
Adjusted profit before tax guidance	Bottom end of £132m-£138m	Not disclosed in this update
Year-end leverage ratio	Around 1.0x net debt/adjusted EBITDA	Not disclosed in this update

Utility Warehouse customer growth remains the main attraction

The standout positive here is customer growth. Telecom Plus grew total customer numbers by 23.3% to 1.43m, including 193k fixed-line and broadband customers acquired from TalkTalk. Strip that acquired element out and the business still delivered 10.3% organic customer growth to 1.26m, which is a strong result in a competitive consumer market.

That matters because Telecom Plus is built around recurring household bills. More customers should mean more predictable long-term revenue, especially if they take multiple services on one account. Management says it has now delivered compound double-digit organic customer growth for close to five consecutive years, which is exactly the kind of consistency long-term investors tend to like.

Service growth was solid, but not as strong as customer growth

Total services rose 12.1% to 3.80m, while organic service growth was 7.6%. That is still growth, but it lagged customer growth, which tells you customers are not adding extra products quite as quickly as hoped.

There were some mixed trends under the bonnet. Mobile services jumped 29%, which is impressive. But energy grew only 1.8%, organic broadband rose 3.8%, and insurance services actually fell 8.3%.

That is important because the whole Utility Warehouse pitch is bundling. If the company signs up lots of customers but sells fewer services to each one, the lifetime value of those customers can suffer.

TalkTalk customer acquisition looks promising, but the full value still needs proving

The acquired TalkTalk customers look like a meaningful growth lever. Telecom Plus says the 193k customers are expected to generate a return above post-tax WACC, or weighted average cost of capital, which is basically the company’s hurdle rate for creating value. That is encouraging because management is saying the deal should pay its way even before any extra selling.

There is also some early evidence the cross-sell strategy is working. So far, 14.5k of these customers have been upgraded and cross-sold, and 160k had been migrated onto Telecom Plus systems by year end. The rest are expected to move across by the end of the first quarter of FY27.

My read is that this is quietly one of the more interesting parts of the update. If Telecom Plus can turn these broadband customers into full multi-service households, it could lift services per customer and improve returns. But right now, it is still early days.

Why profit guidance slipped to the bottom of the range

The weaker point in this update is profit. Adjusted profit before tax for FY26 is expected to land at the bottom end of the £132m-£138m guidance range because a warm winter reduced energy consumption.

That is a useful reminder that even a recurring revenue model is not bulletproof. People may stick around, but if they use less energy, profits can still come under pressure. It is not a disaster, but it does show that weather and consumption patterns still matter.

Competition also looks tougher. Management said strong activity in energy and broadband held back growth, and the churn rate crept up to 14.2% from 13.7%. Churn means the percentage of customers leaving. A small increase is manageable, but it is not a number investors will want to see drift much higher.

Energy competition is real

Telecom Plus points to the shape of the energy wholesale forward curve, which allowed rivals to offer fixed tariffs well below the Ofgem price cap for much of the year. In plain English, competitors had room to be aggressive on price. That helps explain why energy growth was muted and why churn edged up.

This is the main negative in the statement for me. The model still looks resilient, but it is not immune to sharp pricing pressure.

Revised shareholder payout policy could be a real plus for investors

One of the biggest market takeaways may be the new distribution policy. Telecom Plus plans to maintain a total payout ratio of at least 80% of adjusted profit after tax, but from the full-year results in June this will be split between ordinary dividends and either share buybacks or special dividends.

At least 50% of the total payout each year will go to ordinary dividends. The balance will go to share buybacks or special dividends depending on whether the company believes it can repurchase shares below fair value.

I think this is a sensible move. It keeps a strong dividend commitment in place while giving management flexibility to buy back shares when they look cheap. The total cash amount for FY26 is not disclosed in this update, because adjusted profit after tax is not disclosed here.

Balance sheet still looks healthy

The company expects its year-end leverage ratio to be around 1.0x net debt/adjusted EBITDA, including the TalkTalk customer acquisition cost. EBITDA is earnings before interest, tax, depreciation and amortisation, a common cash profit proxy. A ratio around 1.0x suggests debt is present but not stretched.

That matters because it supports the case for continued payouts and future growth investment at the same time. In other words, Telecom Plus does not appear to be overreaching.

Partner growth supports the long-term Telecom Plus story

Telecom Plus added more Partners, taking the total to 77k from 72k. That is central to the business model because Utility Warehouse relies heavily on its network of Partners to recommend services by word of mouth rather than via expensive mass marketing.

Management also highlighted an encouraging increase in monthly active Partners in the second half. If that continues, it should help support customer acquisition without blowing out acquisition costs. That is a quiet positive in this update.

What to watch before the full-year results on 23 June 2026

• Exact profit figure – the company has only said bottom end of the range, not the precise number.
• Services per customer – this needs to improve if the group is to maximise customer value.
• Churn – a further rise would suggest competition is becoming more damaging.
• TalkTalk cross-sell progress – more upgrades could become a meaningful earnings driver.
• Payout details – investors will want to see how much goes to dividends versus buybacks.

My verdict on the Telecom Plus trading update

This is a good update, not a perfect one. Telecom Plus is still doing the hard bit well: attracting customers, expanding its base and generating enough cash to support generous shareholder returns. The TalkTalk deal also appears to be off to a decent start.

On the other hand, the softer profit outcome, higher churn and weaker growth in some key services show the business is facing more competition than the top-line customer number alone might suggest. So the tone here should be positive but measured. For existing shareholders, there is enough to like. For potential investors, the June results now matter more than usual.