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(Sharecast News) - Gamma Communications said in an update on Wednesday it had made a good start to 2026, with trading in line with expectations, healthy cash generation and full-year guidance reiterated, as it confirmed preliminary discussions with a potential suitor.
The FTSE 250 communications technology provider said Gamma Germany continued to see strong adoption of cloud communications solutions, supported by new customer wins and upselling to existing customers.
In its UK SME business, Gamma said the market continued to face headwinds, including the industry-wide impact of the planned switch-off of the UK's legacy public switched telephone network in early 2027, as previously guided.
However, it said cloud volumes continued to grow, driven by demand for Webex for Gamma and PhoneLine+, while customer engagement and the partner pipeline remained healthy.
Gamma said its service provider business was seeing early traction from its international strategy in Europe and Asia-Pacific, after signing its first local customer contracts in Germany, Australia and Singapore.
Its enterprise division also continued to make progress, with contract renewals and new business wins including an AI-led customer experience deployment at JD Sports, as well as further wins across local government and the NHS, including Rochdale Borough Council and Greater Glasgow & Clyde NHS.
The group said it continued to generate healthy underlying cashflows and maintained a strong financial position.
Net debt stood at 1.6m at 30 April, down from 9.3m at the end of December, after 12.1m of expected cash outflows for its share buyback programme to the end of April and 3.8m of deferred and contingent consideration related to prior acquisitions.
Gamma reiterated that it expected full-year 2026 financial performance to be in line with market expectations, with adjusted EBITDA within the consensus range of 138.1m to 142.8m and fully diluted adjusted earnings per share between 90.9p and 94.4p.
Separately, Gamma responded to press speculation by confirming that Providence Equity Partners was among the parties in preliminary discussions with the company, following its announcement on 7 April that it had received interest from a number of potential counterparties.
The company said there could be no certainty that any offer would be made, nor as to the terms of any possible offer.
Under the Takeover Code, Providence must by 1700 BST on 10 June either announce a firm intention to make an offer for Gamma or state that it does not intend to do so, unless the deadline is extended with the consent of the Panel on Takeovers and Mergers.
Gamma said it expected to provide its next trading update alongside interim results for the six months ending 30 June, scheduled for 7 September.
At 1004 BST, shares in Gamma Communications were up 4.42% at 933.48p.
Reporting by Josh White for Sharecast.com.
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