Kcom bets on services as carrier arm falters

Firm ties up a £200m finance package as it unveils full-year results

Kcom has placed its bets on its managed services offering as its traditional carrier business begins to falter, the firm said as it unveiled its full-year results.

For the 12 months to 31 March, before exceptional items were considered, Kcom's audited operating profit fell 0.4 per cent annually to £55.2m on audited sales which dropped 0.6 per cent to £372.9m over the same period.

Its audited profit before tax after the consideration of exceptional items reached £47.7m – up 5.9 per cent compared with last year.

The telecoms firm said commoditisation of legacy carrier kit has prompted it to focus on its managed services offering.

"As we focus on the delivery of value-added services to the enterprise market, we expect to see a continued decline in some traditional carrier revenue," it said.

"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."

It said despite turning away from its traditional business, much of its technology will form an important part of its managed services offering, which it expects to boom.

"We believe [the managed services] market will exhibit significant growth and provides opportunities for the group, driven by the need for organisations to make catch-up investments post the economic crisis; the complexity of managing multiple customer contact channels; the need to exploit the capability of a range of systems and platforms; and a focus on increased efficiency, collaboration and productivity within organisations," it said.

Kcom also announced it has successfully refinanced the business thanks to securing a £200m revolving credit facility for the next five years.

Kcom's chief executive Bill Halbert said: "The refinancing of the business, coupled with the underlying strength of the group, gives us the confidence and capacity to consider targeted investment in both organic and inorganic growth opportunities to strengthen our competitive position."