Simplified communications group planning for growth
TalkTalk, the Salford-based communications group, said it enters 2020 as a much simpler business, in a trading update covering the third quarter period today.
The group, which announced the sale of its FibreNation business for £200m earlier this month, reported headline revenues, excluding carrier and off-net revenues, of £383m, compared with £386m for the same quarter last year.
Headline on-net revenues of £310m were down on last year’s £316m turnover, while its off-net revenues were static on £3m.
However, chief executive Tristia Harrison said: “TalkTalk enters 2020 a far simpler business with a structural advantage to accelerate Full Fibre nationwide.
“The recently agreed sale of our FibreNation business for £200m will strengthen our balance sheet while securing a long-term, competitive wholesale agreement, as well as full optionality to work with all Full Fibre builders.”
She added: “In the last quarter, we have outperformed the market on Fibre and Ethernet growth, with increasing numbers of customers in both Consumer and B2B taking higher speed products.
“We have continued to see industry-wide Voice decline, but with the successful completion of our move from London to the North West and the resulting cost reductions our EBITDA outlook remains unchanged.
“As we look forward, we will reap the benefits of this simplification, further cost reductions, a strengthened balance sheet and cash generation.
“Plus, clear optionality to realise our scale and accelerate customer migration to Full Fibre products over the long term.”
During the reporting period TalkTalk accelerated its Full Fibre strategy, and announced that the proceeds of the FibreNation sale will be used to strengthen the group’s balance sheet.
The busineess also revealed that it is in talks with BT Openreach on a national Full Fibre agreement.
There is a continued focus on Fibre in Consumer and B2B markets.
TalkTalk reports strong momentum in Fibre net adds continued with 148,000 during the third quarter, compared with 146,000 at the same point last year, accounting for a 32% share of all new Openreach Fibre to the Cabinet (FTTC) lines in the third quarter, up from 23% a year ago.
Also, 81% of new Consumer customers took a Fibre product, up from 63% last year, with 42% of these taking the faster, higher ARPU 80mbps product (Q3 FY19: 31%). The group said 52% of new Partner customers in its B2B division took a Fibre product (Q3 FY19: 44%).
The group’s Ethernet base grew by 1.7k (Q3 FY19: 1.1k), with 36% of orders for higher ARPU 1Gb lines (Q3 FY19: 29%).
Ethernet circuits are high margin products and the 1Gb product has materially higher ARPU and lower churn.
Elsewhere, the group said its cost savings drive is on track, with the headquarters move to Salford now complete.
