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TalkTalk Q1 “on track”

UK quad-play provider TalkTalk, providing the first trading update for the three months to June, said the overall broadband market had been softer than previous quarters due to a quiet consumer environment. First-quarter revenue was up 3.5 per cent year-on-year, marking a slowdown from the 6 per cent recorded in the previous three months.

In a Q1 trading update, the company said: “We have made a good start to FY16. We are on track to deliver full year revenue growth of 5 per cent and strong growth in EBITDA and Free Cashflow as we make progress towards our FY17 targets.”

“Revenues during the quarter grew by 3.5 per cent year-on-year with strong growth in on-net (+6.5 per cent) and corporate (+4.9 per cent) offsetting the continuing decline in off-net revenues (-47 per cent). Revenue generating units (RGUs) per customer on our on-net base grew by 15 per cent to 1.6 compared to 1.4 a year ago, and demand for Ethernet connections in TalkTalk Business has remained firm.”

“The launch of our unlimited SIM at the beginning of the quarter has delivered strong growth in mobile with a 15 per cent share of the new SIM only market in the quarter compared to 11 per cent in Q4 FY15. In contrast, the broadband market was softer than we have seen in recent quarters, with higher promotional activity in the sector.”

“Against this background, the migration of Tesco broadband customers onto our network has begun well and we expect to complete the process over the remainder of FY16.”

“At the end of June we announced details of our Fibre to the Premise proposition in York. The service, called Ultra Fibre Optic, will come as standard with TalkTalk’s three consumer packages, SimplyBroadband, Essentials TV and Plus TV, as well as TalkTalk’s Complete Business Broadband package for small to medium sized firms.”

“The first customers are expected to be connected this autumn and homes and businesses currently with TalkTalk will be able to receive a priority upgrade to Ultra Fibre Optic.”

“We have made good progress across many of our MTTS (Making TalkTalk Simpler) programmes during the quarter and are on track to deliver substantial savings during the second half of the financial year.”

“As part of our ongoing review of legacy tariffs and bases we have begun a review of the profitability of different groups of customers on our on-net base to identify any benefits that might be available from further simplification of the base.’

“In addition, we have announced the consolidation of our sites in the North West to a single site at Manchester’s Soapworks development, which will allow us to reduce property costs from FY17 onwards.”

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