(TEP.L) Telecom plus PLC Buy/Sell

NPower have allowed their option to lapse,& it would be interesting to know the real reason why,not that we ever will.I would like to think its because CW discouraged it by saying he would leave if they bought him out,& he feels that he can take Tep to being a bigger company if left to run it independently.
On the other hand,if I was Npower,there is a large(& growing)amount of turnover from the Tep connection,& I would want some influence over future policy decisions.
There must be scope for Npower taking a strategic stake in the company,by either buying stock in the market(tricky)or taking a placing.
Hopefully a positive Interim statement next week will reassure investors & the long awaited rerating can take place.
I have increased my stake by about 15% this week.

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Jaymze
CW responded to an email of mine some months ago saying that he considered that the UK market could double,double & double again,after I had asked whether the company could roll out its concept overseas.

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Any extra competition could potentially affect all players in the market. The important thing to note is the size of TEP. I think I read once before they could double, double, and double again and still not be as big as BT. What I'm saying it there is plenty of market share for TEP to grow substantially.

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Simple answer, NO. Tplus has a unique customer relationship with press credibility for value for money and service which the "traditional" suppliers (be it the likes of BT, Virgin or retailers like Tesco) can only dream of and can never match, so can't see any impact on the exponential growth of Tplus into the future.
On another matter, the npower option has now lapsed and the CEO remains the major shareholder and the driving force into the future which in my opinion should have a positive impact on the share price.
I am confident the half year results on 25th will as always be excellent.

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Will the following hurt TEP?

Date: Friday 20 Nov 2009

LONDON (ShareCast) - 'Britain’s biggest retailer, Tesco, is to continue its diversification away from its core supermarket business by offering a combined broadband and home phone service.

The company has signed a five year deal with telecoms giant Cable & Wireless, which will supply Tesco with wholesale broadband services.

The company also intends to double the number of in-store phone shops to 200 by the end of next year, and ultimately sees the number of units rising to 500.

Meanwhile, the online business is fast approaching capacity in some areas, prompting the company to rethink its policy of servicing online customers from existing stores rather than setting up dedicated depots to handle web orders. At present, Tesco has just two stores dedicated only to serving Internet customers but plans to open one a year over the next few years. '

F1

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The Trading Update(30/9/09)suggested a slowdown after the new initiative was introduced at the end of July,but that business picked up again after the conferences on 13/14 Sept.
I do not recollect coming across any figures for bad debts,but clearly they were higher for renters than owner occupiers.I am therefore unaware as to the impact of an improvement in the provision for bad debts may have on the bottom line.
I would be interested to hear from any Distributors regarding bad debt clawbacks.
My recollection was that this year was expected to show slower growth in profits,due to the cost of expansion(acquiring customers) & stronger growth is expected in the next year(to 31/03/11)

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I'm not sure that the interims will be as positiove as everyone thinks - what are your views on the change of strategy not to entertain non home owners as customers - has this had an impact on growth?

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Oops!
My previous post should have said that the SP performance was excellent when markets were in freefall!

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I first bought in over 2 years ago & have today increased my stake ahead of Interims due on 25 Nov.
The recent trading update was pretty optimistic & I am assuming that there has been no bad news in the intervening period.
The SP performance when markets were in freefall but hasnt responded to the wider market recovery.
My investment is long term,but I would hope that the recent appointment of a joint broker,together with a positive trading statement next week could result in a rerating .
The company is debt free ,has cash & property on the balance sheet together with a good investment,ceo with a substantial stake & a great track record,plus a 22p divi this year & projected 24p next year.

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I'm not yet a TEP share holder, but they are on my watchlist. I've been a UW customer for around 5 years and whilst they were the cheapest back when I joined, others can beat them on Gas & Electric alone.

UW really come into their own with the other services bundled in. I also have the Broadcall and the cashback card is a real gem. I average a saving of £40-£50 per month alone on this one product. I'm not aware of any other Utility company offering a similar product. This though won't appeal to everyone as it's limited to certain merchants.

I've only recruited a few members to UW but I save another x% per month from them.

I've set a price for when I want to buy in and I'm just waiting for it to get there.

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continuation diamond (bullish) from 306 to 394-414

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the npower option was based on a multiple of ebitda, that would have meant paying about £10 so obviously they let it expire

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Spot on post and i think the only thing you have missed is the potential for a "bigger" firm to buy us out.
Not that any distributor wants that to happen but in the longer term it might happen at some point. We have to be realistic.
A very safe investment for you though with the dividend yield at least. Better than any bank at the moment. We could well see 350 again and i reckon about 280 is the bottom unless we some really bad news come out.
As far as commisions go the company have actually tried hard to up it's payments in the last few years and the ones who work up the tree do get hansomely rewarded.

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Great posting and well balanced. I also believe there was an option for npower to purchase part of the company but that is due to expire this month. That may of had an effect on the price since nothing has happened on this front yet.

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Hi everyone I've done some research on this stock and I'm thinking of investing some of my hard earned. I'd like to share with you all the positives and negatives as I see them.

Positives
Excellent history of increasing turnover
Strong history of profit growth
Strong history of dividend growth
Largely self employed work force (minimal overhead as no NI, pensions etc to pay for)
Cash rich and little or no debt (hopefully I'm reading the balance sheet properly) which is a massive bonus in the current climate.
To a degree the current climate (unemployment wise) could actually be seen as a positive for TEP as its distributor business model is very accessible and would be desirable for anyone wanting to build some added security for their future (currently there must be loads of people who would benefit from a second income).
Very healthy dividend yield.

Negatives
The biggest potential negative I can see is the ongoing erosion of margins. Ultimately TEP needs to be able to pay its distributors a decent commission in order to keep them all happy and after reading the most recent company accounts (and also looking at the history of profits against turnover) it's clear that TEP are operating in a competitive marketplace.
The Chairman's report in the last account commented that the next set of results might not be so good due to pressures on margin, but that the longer term trend should remain healthy. I suspect that this is the main reason why the shares have struggled over the last half year. I expect the market now needs to be reconvinced that this stock is still a solid growth story before the shares move upwards.
Bad debts - whilst our economy is struggling they will continue having to write off unpaid bills as bad debt, although the hope is that the economy could be picking up from where we are now.


Out of interest I compared the gas and electricity costs of UW with my current provider npower and actually found there to be little difference in cost. The gas was cheaper with npower, but the electricity was cheaper with UW. I also used one of the online price comparison sites to check the wider market and found several providers cheaper still, so I'm not convinced that TEP will thrive on cost alone.

In summary I do think that TEP is a super business and I like the business model, but my only real reservation is margin and TEP's ability to stay competitive on charges & be able to pay decent commission to its sales force. I'm sure many of the posters on this board are also distributors so how are you all finding business in the current market? Have the rates of commission that you receive been reduced in recent years?

It looks as if there will be a trading update later on this month so buying now gives the chance of an uplift if the update is positive. I'm tempted to have a go on this one, but I don't think it's quite the no brainer that some of you seem to think.

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Lets hope this results in a "smaller spread" re share dealings

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bloomberg

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Buddaman, thanks for that but on Digital Look a site I have used for many years for info they have wiped off the instituitional holdings so could you please advise me on where your info is obtained.
Many Thanks SRB

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standard life 9%
herald 4%
legal 3%
halifax 2%
orvyx 2%
jpm 2% sold 4mill august
north atlantic di8sappeared might explain why the share has been trading sideways for past year

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In July this year I had Standard Life in for 6.2m shares, North Atlantic Value LLP for 2.9m and JP Morgan for 4.1m. As of today they are all gone, Ive seen the RNS regarding JP Morgan but not a dicky bird on the others so can someone confirm that we have no instuitional investors on board at the mo.

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