Telecoms services provider eyes a move upmarket

Gamma Communications is considering a move to the main London stock market after reporting strong half-year results.
Given its size, the Aim-listed telecoms services provider could become a member of the FTSE 250 mid-cap share index.
After reporting an interim pre-tax profit of £48.5 million for the six months to the end of June, up 11 per cent from the same period last year, it said: “The board is beginning to consider a move to the main market. We will provide a further update in January 2025 following engagement with our largest shareholders.”
Andrew Belshaw, its chief executive, said: “We’re one of the five biggest companies on Aim and we have run Gamma for the last three or four years as a FTSE company. So the governance that goes with being on the main market, Gamma has adopted that and brought it in.”
The London-based business reported revenue of £282.5 million in the first half of 2024, a 10 per cent increase from the same period in 2023. It said the increase in revenue and profits was thanks to a growing demand for communications solutions and the group’s expanded offering.
Belshaw, 50, said that moving to the main market was a “natural evolution” for Gamma and would help the company to continue its growth. “If I did want to do a really large deal at some point in the future, it’s easier for me to access the capital on the main market than it is on Aim.
“Aim is a great market for small businesses and it’s done really, really well for Gamma, but I think when you get to a certain size and you’re thinking that you might be doing fundraising of a certain size in the future, the main market is where you need to be.”
As part of its expansion strategy in Britain and Europe, Gamma has carried out several acquisitions. This year it has completed two takeovers, of Coolwave Communications, a telecoms provider, and BrightCloud, a contact centre company. Gamma is also expanding its presence on the Continent, having conditionally agreed with Cisco to acquire Placetel, a German business.
“We get really excited about Germany because it’s bigger, it’s got a lot of small businesses and they’re really behind in terms of their adoption to cloud and that’s why we’ve acquired a couple of businesses in Germany,” Belshaw said.
Gamma, which handles 30 per cent of all British business calls ranging from small companies to large corporations, said it expected to report continued growth in the second half of the year and in 2025. It forecast annual adjusted profits at the top half of market forecasts, while adjusted earnings per share for the full year are also anticipated to be at the upper end of City expectations. This is an improvement from previous guidance, when the company said its earnings per share was likely to be within the range of analysts’ expectations.
Gamma announced an interim dividend of 6.5p per share, up 14 per cent from 5.7p per share last year.
Founded in 2002, Gamma handles business calls in Britain, Spain, Germany and the Netherlands. It employs about 1,900 staff and its clients include Tui, the British Heart Foundation and the Open University. Gamma joined Aim, London’s junior stock market, in October 2014.
James Lockyer, an analyst at Peel Hunt, the broker said Gamma had raised its forecasts after reporting stronger sales figures in the UK. “Gamma’s specific customer mix appears to be in its favour,” he said. “Not only is its broadening product suite resonating well with its channel partners and enterprise customers, its UK gross profit was up circa 8 per cent on an organic basis, or circa 12 per cent including M&A.”.
Shares in Gamma rose 192p, or 12.8 per cent, to close at £16.94.