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Thus cautious on outlook

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Thus - the firm behind Demon Internet - delivered a cautious outlook for second-half trading today. It forecasts growth over the first half in all continuing operations, but "second half Data and Telecoms growth has however been lower than expected, principally as a result of a decline in turnover from low margin, wholesale voice services and the impact of the regulatory reduction in fixed to mobile termination rates".

The Scottish telco says that both factors will affect turnover in the next financial year, "although they will have minimal impact on EBITDA and cash flow".

In its trading update today, Thus described financial performance over the last year as "consistent with the Board's expectations". Group turnover for the year to March end is expected to be around £360m compared to £332.4m for the previous year. Data and Telecoms, Managed Solution Services and Internet Services showed a "solid year on year improvement". EBITDA (earnings before interest etc.) for the full year is expected to be at least £39m.

Last November Thus blamed fierce competition for a slide in earnings as rival operators scrap hard for new business. At the time it "remained cautious on pricing and the market structure for telecommunication services in the UK" as it continued to battle with the tough trading conditions.

At 9.45am shares in Thus were up 0.75p (5.66 per cent) at 14p. ®

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