Companies: AN.    ATCG   

It may sound trite, but communication technologies have revolutionised the way businesses of all sizes operate. With more-and-more firms embracing innovative solutions, a pride of specialist consultants are reaping the rewards.

AIM-listed Alternative Networks is one such company. The group offers a range of voice and data-related products and services to clients – including traditional telecoms line rental packages, broadband services, mobile tariffs and Blackberrys – and is performing strongly.

Interims released in June impressed, revealing revenues improved from £22.4 million to £32.1 million and profits before tax lifted by just over a million to £2.8 million, ahead of chief executive James Murray and the board’s expectations.

The acquisition of rival telecoms solutions business ICB last October played a significant role in the figures, enhancing sales by £7 million, yet Murray also attributes much of his charge’s success to the diversity of its offerings. ‘65 per cent of our customers take more than one product from us, while 53 per cent take three products or more,’ he elaborates. ‘Our aim is to become a firm’s trusted partner, maybe taking over something like line rental first. As the relationship develops we can then advise them on other services.’

As for the future, further acquisitions remain on the agenda and as Murray admits ‘our aim is to get through the £100 million revenue mark.’ He does caution, however, that ‘we won’t buy things for the sake of it.’

It remains to be seen how long it will take for Alternative Networks to achieve this goal, but given its performance thus far the omens look good and forecasts indicate further rapid growth. House broker Investec expects a £5.9 million profit for the full year, on revenues of £65.4 million.
 
A year on, profits are expected to top £7.5 million as revenues move to £74.4 million. Estimated earnings of 9.1p for 2006 place the shares on a prospective p/e of 11.4, which to my mind looks good value.

AT hits acquisition trail

Also fairing well is AT Communications, which bills itself as a systems integration specialist and again provides a range of services from IP telephony through to mobile communications.

Like Alternative Networks, AT has been on the acquisition trail of late, recently snapping up traditional telecoms services business Britannia Telecom for £3.8 million. Although the transaction saw AT swallow £2 million of debt (bringing its own net debt position up to around £4 million), the deal boosted the group’s customer base, bringing in more than 2,300 clients, predominately based in the north west of England.

The acquisition should enhance revenues and profitability too. Last year Britannia achieved a top-line £5.4 million from which it produced profits of £431,000. Those kinds of numbers will buoy the fortunes of AT, which enjoyed a 57 per cent sales rise to £15.1 million in 2005, although losses of £22,000 were racked up after £885,000 of exceptional expenses relating to earlier takeovers.

With the various acquisitions now bedding in, forecasts for 2006 (from house broker Daniel Stewart) are bullish. Sales are expected to rocket to £39.2 million, hauling profits through to something approaching £4.7 million and lifting earnings to 6.3p. As the shares currently change hands for 49p, this places them on a prospective p/e of just 7.8. Hit these numbers and the group will therefore be in line for a significant share price upgrade.