Communications giant remains on message despite £15m hit from Covid-19

TalkTalk's offices in Salford

Communications giant TalkTalk expects a £15m hit from Covid-19 this year but sought to reassure investors that it can maintain operational profitability.

The Salford-headquartered business stopped short of issuing formal guidance for the current financial year but was upbeat in its commentary.

In a show of its confidence it has maintained its dividend at 2.5p per share. Many companies have deferred dividends or cancelled them, preferring to keep hold of the cash until there is more certainty with the economy.

TalkTalk moved its headquarters from London and completed the £206m sale of its fibre assets business to CityFibre. Chief executive Tristia Harrison believes those changes has made TalkTalk “a simpler and more resilient business”.

Its headline EBITDA – a measure of operational profitability – for the year to March 2020 showed a 10% increase to £260m. This figure is the pre-IFRS 16 accounting method.

Harrison said: “Our FY20 performance has been robust. We have grown our Fibre Broadband base by 34% and grown our Headline EBITDA by 9.7%. Whilst industry wide Voice usage declines and the continued re-contracting of the legacy copper base has led to some revenue decline, this has been more than made up by ongoing cost reduction and simplification.”

TalkTalk was originally set up as part of Carphone Warehouse but in March marked 10 years as a standalone company.

It remains positive as it begins its second decade. It expects “ongoing flexibility in the cost base, accelerated by COVID-19” will offset any potential negative impact on bad debt or revenues.

It put in a £3m provision with regards to bad debt for its 2020 financial year and has forecast a £15m impact for 2021, which its said reflects current demand and bad debt.

Harrison added: “Access to reliable, affordable connectivity has never been so important – and low prices matter now more than ever before. As the only scale, value provider, TalkTalk continues to be well positioned to meet this demand.”

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