TalkTalk unveils best results ever – and its share price dips

TalkTalk's share price dropped two per cent after it delivered its best ever quarterly financial results, for the end of 2014.

The company posted revenue in the 12 months to 31 March 2015 of £1.8bn, up 4.2 per cent on the previous year, and profit of £76m, up 24.6 per cent, helped by improved efficiency.

Unusually for TalkTalk, this does not seem to mean a reduction in customer service. The EasyJet of ISPs, TalkTalk is trumpeting its improved customer ratings – thanks to EE it’s no longer bottom – and customer churn is down to 1.3 per cent.

Growth has come from taking on some Virgin Media customers and all of Tesco broadband’s customers. With 82,000 TV customers added it now has 1.4m viewers.

TalkTalk has found customers which take two services to be higher revenue and lower churn, with the effect correspondingly magnified when they become triple and fourplay customers.

Like the consumer packages, the business services concentrate on price rather than advanced services. TalkTalk's press release said:

“We launched our first ever above-the-line marketing campaign for Business Broadband aimed at the SoHo and SME markets, highlighting our compelling price proposition versus BT (£10.50 per month for unlimited data and calls, including unlimited to mobile numbers, compared to £27 per month for the equivalent product from BT). We also launched a free voice app called Talk2Go which allows customers to use existing fixed line minutes on their mobile free of charge as well as free app to app calls, delivering even further value to our Business Broadband proposition”.

Most interesting in the results document (PDF) is the information on fibre-to-the-home. TalkTalk and Sky are together digging up streets around York to lay fibre at a cost of around £500 per premises passed. The company expects a 30 to 40 per cent take up rate when it is launched.

TalkTalk is building an “inside out” network based on femtocells, its own guard band spectrum and the MVNO agreement with O2. All of these will allow it to offer 4G, something it’s not done up to now.

Ken Odeluga, a senior market analyst at CityIndex told El Reg by email: “There are no genuine shocks in headline numbers and one or two notable achievements, including the fastest quarterly revenue growth (+6 per cent) and slowest annual churn (at 1.3 per cent vs. 1.5 per cent).”

He did, however, point out that when TalkTalk trumpets 82,000 net new TV additions in Q4, the number was actually down on the 115,000 in Q3. Odeluga added: “TalkTalk aims to take a tighter rein on TV churn risk, but may open the door to BT and Virgin Media, whose quarterly rate of TV adds are trending slower with Virgin Media cable adding 77,000 in Q4 and BT 46,000.”

All of which would be great if the broadband service doesn't suffer repeated outage problems. One Reg reader has written to us saying that there were a number of outages this morning, including one he’s suffering that isn't shown on the TalkTalk status tracker – which, of course, you can only read if you have access. Even if you can read the tracker, the news is not good. ®