Telecoms services provider eyes a move upmarket

Gamma Communications, after reporting strong results for the first half of the year, is considering moving to London’s main stock exchange.

Aim’s telecoms services provider, with its size, could join the FTSE 250 Mid-Cap Share Index.

The company reported an interim profit before tax of £48.5million for the six-month period ending June 30, up 11% from the same time last year. “The board has begun to consider a move on the main market,” it stated. In January 2025, we will update you after engaging with our largest investors.

Andrew Belshaw, the chief executive of Gamma, stated: “We are one of the top five companies on Aim, and we’ve run Gamma as a FTSE-listed company for the past three to four years.” Gamma has taken on board the governance associated with the main market.

The London-based company reported revenue of £282.5million in the first six months of 2024. This represents a 10% increase over the same period of 2023. The company said that the growth in revenue and profit was due to the growing demand for communication solutions and the expanded offerings of the group.

Belshaw, a 50-year-old, stated that Gamma’s move to the main market is a “natural progression” and will help it continue to grow. If I wanted to do a large deal in the future, the main market would be easier to access than Aim.

“Aim has been a fantastic market for small business and Gamma has done very well with it. But when you reach a certain level and think that you may be fundraising in the future of a certain scale, you should be focusing on the main market.”

Gamma’s expansion strategy in Britain, Europe and beyond has seen it make several acquisitions. In the past year, Gamma has acquired two companies, Coolwave Communications – a telecoms company – and BrightCloud – a contact center. Gamma has also expanded its presence in Europe, after agreeing with Cisco on condition to buy Placetel, a German company.

Belshaw stated, “We are excited by Germany because of its size and the fact that it has a lot of smaller businesses. They’re behind in their cloud adoption and this is why we have acquired two businesses in Germany.”

Gamma, a company that handles 30 percent of all British business phone calls, from small businesses to large corporations, has said it expects to continue to grow in the second half and 2025. The company expects to report adjusted annual profits in the top half market expectations, and adjusted earnings per share will also be higher than City expectations for the entire year. The company’s previous guidance stated that its earnings per share would likely be in the analyst’s range.

Gamma has announced an interim dividend increase of 14 per cent, from 5.7p to 6.5p.

Gamma, founded in 2002, handles calls for business in Britain, Spain Germany and The Netherlands. About 1,900 people work for the company, and among its clients are Tui and the British Heart Foundation. Gamma, London’s junior market, joined Aim in October 2014.

James Lockyer is an analyst with Peel Hunt. He said that Gamma’s forecasts had been raised after it reported stronger sales in the UK. He said that “Gamma’s particular customer mix seems to be in its favor.” Not only does its expanding product range resonate well with channel partners and enterprise clients, but its UK gross profits were up around 8 per cent organically, or about 12 per cent if you include M&A.”

Gamma shares rose by 192p or 12.8% to £16.94.