Alternative Networks has issued a profit warning following 'significant ongoing pressures' on its mobile business, namely on roaming revenue and profitability arising from a combination of increased network competition and the regulatory headwinds carriers currently face.
The Group's Advanced Solutions business continues to make good progress following the completion of the integration of the acquisitions made in 2014, but this has been offset by the mobile shortfall, said the firm in a statement.
The Board currently estimates that for the six months ending 31 March 2016, aggregate revenue across the Group is expected to be broadly in line with the same period in the prior year.
The statement also notes that gross profit is expected to be, in percentage terms, low double digits below the level seen in the same period in the prior year resulting in Adjusted EBITDA also below the first half of FY2015.
The Group has taken measures to improve profit margins and is considering further mitigating actions that should alleviate some of this impact over the rest of the current financial year and beyond.
Mobile revenue and profitability reductions are being driven by significantly reduced roaming revenues as a result of new global tariffs launched by the carriers.
This impact is being seen across the UK mobile market but Alternative has been particularly impacted due to its comparatively larger roaming base.
Historically, the Group has generated a large proportion of mobile profits from roaming in both voice and data, particularly from outside of the EU as demonstrated by the comparatively high ARPU, said the company in a statement.
Alternative's approach has been to match competitive tariffs to retain customers and the Group will continue to invest in the mobile proposition to attract new customers and provide existing customers with a market leading experience.
The balance of the Group's portfolio - Advanced Solutions and Fixed Voice - continue to trade in line with the Board's expectations.
The Group's cash generation remains strong and in line with current guidance the Board currently intends to propose a full year dividend at least 10% above the prior year level moving to 15% in the medium-term.