Kcom: Whoops – our traditional carrier biz is going nowhere
BA and Phones4U supplier bigs up perky cloudy biz amid falling connectivity
Brit telco Kcom this morning issued a stark warning about the state of customer demand for traditional carrier services – as it outlined an unremarkable set numbers for its fiscal 2014 year.
The LSE-listed supplier of broadband and tech services, which this week secured a £200m revolving credit facility until June 2019, saw group sales dip 0.6 per cent year on year to £370m.
This is the third consecutive year the Hull-based business – which counts BA, Virgin Atlantic, Red Hat and Sports Direct among its client base – has failed to get the turnover wheels moving forwards.
Kcom made an operating profit of £55.6m, down 0.4 per cent year on year, for the 12 months to March 31. But with fewer exceptional costs (£588k) and once the taxman and bank interest was coughed up, it filed a net profit of £38.7m compared to £35.8m in 2013.
The KC trading brand, which sells web connectivity and related data services via its East Yorkshire network, grew marginally in the year to £105m from £104.5m a year ago. Some 45,000 premises were getting web access from the firm.
The tech and comms integrator arm Kcom posted declining sales of £270.9m, down from from £273.5m in the prior fiscal period.
"Within the large enterprise market, our carrier only activity is declining due to both the commoditised nature of the products and ongoing pricing pressure from regulatory changes. However, those products will continue to form an important part of our managed services offering," it said.
"We expect to see a continued decline in some traditional carrier revenue," the company added.
Kcom claims large businesses are looking for cloudy services including tech and comms wrapped into a single contract, which helps them make "catch-up investments" post recession and manage multiple customer contact channels (web, email, live chat and contact centres) more easily.
Existing managed services clients include supermarket Morrisons, retailer Phones4U, Admiral Insurance and the National Farmers Union Mutual.
Kcom said small biz customers are still looking to buy connectivity albeit via a more cloudy model. ®