Investment summary

Daisy’s H1 interim results (especially its better-than-expected revenue performance) imply positive underlying organic growth and show impressive margin resilience, given the unarguable deterioration in the UK macro backdrop. The results in particular show management is once again delivering consistent execution in integrating new businesses - a bugbear previously for the market and for the stock’s valuation. A declining exposure to voice (now just 17%) is another boon for investors.

Last updated on 09/12/2011

Industry outlook

The UK SME telecom market is highly fragmented and ripe for consolidation. Although notoriously deflationary, especially on the fixed-line side, there have been some tentative signs that mobile data might be quelling UK mobile deflationary trends. With a strong execution record so far, Daisy is well positioned to benefit from both trends. The company itself sees an incremental £500m opportunity to cross-sell additional services to its existing base.

Last updated on 09/12/2011