• Gamma's UK SME gross profit fell 7% to £69.3 million despite higher cloud and full-fibre volumes
  • German SME gross profit rose 30% to £44.8 million, including 11% organic growth

The fact

Gamma Communications reported first-half revenue of £330 million, up 4% from a year earlier, while gross profit increased 4% to £178.1 million. Growth was led by Germany, where SME gross profit rose 30% to £44.8 million, including 11% organic growth.

The picture was weaker in the UK. SME gross profit fell 7% to £69.3 million even as demand increased for cloud communications and full-fibre connectivity. Gamma said competitive pricing meant new customers and renewals were typically being won at lower margins. Enterprise gross profit also fell 2% to £31.5 million as lower prices agreed on Ethernet contracts renewed during 2025 continued to affect the results.

The assessment

Gamma is selling more cloud and fibre services in its UK SME business, but those additional volumes have not produced more gross profit. The company says lower prices on new contracts and renewals more than offset the benefit of higher demand.

The same effect is visible in enterprise connectivity. Ethernet contracts repriced during 2025 are still reducing the amount Gamma earns from that business in 2026. A contract can therefore remain with Gamma and continue generating revenue while becoming less profitable after renewal.

For BTW readers, the results show why connection growth needs to be read alongside the price and margin of those connections. Gamma's next test is whether UK gross profit stabilises as older renewal effects pass and newer cloud and fibre business contributes for longer.

What to watch

Watch whether UK SME gross profit improves from the £69.3 million reported for the first half and whether enterprise margins recover as the effect of 2025 Ethernet repricing fades. Continued volume growth alongside stable or rising gross profit would show that Gamma is adding connections without giving up as much margin to win or retain them.