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Isle of Man telco eyes direct to market and reseller opportunities
Thursday 20 Sep 2018 Author: Steven Frazer

Isle of Man communications network incumbent Manx Telecom (MANX:AIM) plans to launch a specialist mobile communications service specifically designed for the approximately 11m Brits that struggle with hearing difficulties.

Analysts are confident this could provide the company with a valuable growth lever for what is otherwise a largely mature, yet highly cash generative company.

The stock’s main attraction for investors has largely been its hefty income. Shares in Manx, at the current 169p, imply a 2018 dividend yield of 7.1%, and 7.5% for 2019, based on forecasts.

The hard-of-hearing product has been developed by Goshawk Communications, majority owned by Vannin Ventures, the growth arm set up by Manx to identify new business opportunities.

Manx’s main opportunity will be via the mobile virtual network operator (MVNO) venture it will set up using BT’s (BT.A) EE mobile network. The company is confident it can win circa 600,000 customers over the next five years. Manx will also provide the product to other mobile and fixed-line telecoms suppliers, earnings a licence fee per user.

Analysts at broker Peel Hunt calculate this could add something like £9m to £10m in annual earnings before interest, tax, depreciation and amortisation (EBITDA) to Manx over the coming years based on mid-point assumptions. Manx is expected to report £27.7m of underlying EBITDA for 2018. (SF)

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