Telecom Sector Issues Upbeat Dividend News

LONDON -- The telecoms sector confirmed its attractions to dividend investors this morning after Telecom Plus (ISE: TEP.L) and KCOM (ISE: KCOM.L) issued upbeat payout news.

Telecom Plus, which trades as utility warehouse and resells utility services to ordinary households, said its shareholders should expect a "significant" increase to the firm's forthcoming interim dividend.

Telecom Plus also said this morning that its customer base was growing at an 11% annualized rate and that next month's first-half results would show profits "firmly ahead" of those reported last year.

Andrew Lindsay, chief executive of Telecom Plus, said, "I am extremely pleased with the further progress that we have made during the period. We have seen strong organic growth in both customer and service numbers, and a continuation of the extremely positive trends in the quality of our customer base."

In early trade, the shares of the FTSE 250 group reacted by advancing 26 pence, or 3%, to 898 pence.

Meanwhile, fellow mid cap KCOM dropped 6 pence, or 7%, to 79 pence despite confirming a commitment to lift its annual dividend by at least 10%.

KCOM, which provides landline and broadband services throughout East Yorkshire, admitted its enterprise division had suffered from an "uncertain environment for business investment decision-making" and the operation's year-on-year growth would therefore be lower than expected.

However, KCOM did say its services to residential customers continued to make a strong contribution to profits.

Bill Hallbert, KCOM's executive chairman, said, "The continuing macro-economic uncertainty is resulting in slower new business investment decision making and this is likely to remain the case through the second half of the year. Nevertheless, we remain confident about the underlying strength and continuing cash generative capacity of the Group and are pleased to reconfirm our commitment to delivering a minimum 10% increase in full year dividend."

Today's news from Telecom Plus and KCOM underscores why the telecoms industry appeals to savvy income seekers. No wonder, then, that equity-income star Neil Woodford has placed 10% of his multibillion Invesco Perpetual portfolios into the sector.

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Maynard Paton does not own any share mentioned in this article. The Motley Fool has adisclosure policy.
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