Thus in bullish mood as it generates positive cash flow ahead of schedule

Thus has started generating positive cash flows ahead of schedule and yesterday claimed it had become the first alternative telecoms operator to achieve the milestone on a sustainable basis.

After a board meeting on Tuesday, the company decided to alert the stock market to its better-than-expected cash flow performance, having originally told shareholders it would turn cash flow positive at the end of its fourth quarter. In fact, Thus will be generating cash in its third quarter which ends on 31 March, it said yesterday.

Bill Allan, the chief executive of Thus, said that underlying growth had been stronger in the first half. "It is a confidence booster for investors that everything is on track and the business is holding up well," said Mr Allan.

He said the company's better-than-expected cash flow performance reinforced the board's confidence that the business was on a steady trajectory to deliver positive operating profits in the second half of the next financial year.

But Mr Allan warned the company faced "challenging trading conditions and continued uncertainty on the market structure for UK telecoms". Despite these difficulties, Mr Allan said the company had reached an important milestone in its development.

"Thus believes it is the first UK alternative telecoms operator to have achieved this goal on a sustainable basis," it said in a statement.

Thus competes against BT Group to provide telecom services to both large and small companies. It was once part of ScottishPower but was demerged in the telecoms boom as a separate stock market entity. Its rivals also include the likes of Cable & Wireless and Fibrenet.