30 Jul 2010 07:00
Friday 30 July 2010
TalkTalk Telecom Group PLC
Interim Management Statement - First Quarter FY 2010/11
Integration programme well on track; continued broadband customer growth.
Highlights
·; Group on track to deliver all FY 2010/11 guidance
·; 77% of broadband customer base unbundled (Q4'10: 74%)
·; Total revenue increased by 31% year-on-year to £444 million (Q1'10: £340 million)
·; B2B revenue increased by 14% year-on-year to £87 million (Q1'10: £76 million)
·; Group added 34,000 net new broadband customers (Q4'10: 42,000)
·; Group broadband base of 4.231 million customers at end of Q1 (Q4'10: 4.197 million)
·; Group broadband ARPU £23.90 in Q1 (Q1'10: £23.30)
(All Q1'10 comparators exclude Tiscali)
Charles Dunstone, Chairman, TalkTalk Telecom Group PLC commented:
"I regard this as a very solid performance; we maintained our momentum in the broadband market, as our brand and tariffs continued to appeal to customers seeking straight-forward, value-for-money broadband and voice services. This was achieved against a backdrop of intensive work on integrating the Tiscali base. The programme is well on track to deliver all the synergies identified, and strengthens our platform for further revenue and profit growth. The progress made is best demonstrated by ending the quarter with 77% of our broadband base unbundled onto our Next Generation Network."Dido Harding, CEO of TalkTalk Telecom Group PLC commented:
"TalkTalk has enjoyed a good quarter, delivering our integration programme and growing our broadband base, and enabling us to reaffirm all our guidance for the full year. We are now maintaining our focus on completing the integration across the business. We are also continuing to drive broadband customer and ARPU growth, and will shortly be offering our customers value-for-money mobile voice and data services. Project Canvas has completed its regulatory process, and is now focusing fully on developing compelling linear and on-demand TV services, which our customers can benefit from next year."
Q1 BUSINESS REVIEW
Broadband growth
We added 34,000 net new broadband customers in the quarter, taking the total base to 4.231 million customers. This reflected the slightly slower quarter-on-quarter customer growth typically seen in our business in the first half of the year. Churn across the base remained broadly unchanged.
Broadband revenue grew year-on-year to £301 million (Q1'10: £200 million) reflecting the acquisition of Tiscali and the continuing steady improvement in broadband ARPU, which grew to £23.90 in the quarter, compared to £23.30 in Q1'10. This was driven by the continuing appeal of our Boost products and our higher-value Pro proposition, now re-named Plus, which makes up around 10% of new sales.
Business-to-business (Opal)
Opal's revenue grew by 14% year-on-year, to £87 million. Revenue quarter-on-quarter was broadly flat, reflecting normal seasonal factors such as the Easter break. Our data revenue growth more than off-set the expected continuing decline of legacy voice revenues, and we saw further Ethernet contracts signed. Opal has an expanding pipeline of attractive new data opportunities, which will drive further revenue growth.
Non-broadband
Our non-broadband customer base declined by 89,000 in the quarter to 910,000, in line with expectations. ARPU in the quarter was £19.30 compared to £20.80 in Q1'10, reflecting the lower value of the former Tiscali base and the disposal of the Irish and Belgian businesses at the beginning of the quarter.
Mobile voice and broadband
We have today announced an MVNO agreement with Vodafone UK, which will enable us to offer our customers value-for-money mobile voice and data services, alongside their home phone and broadband. We will be launching our range of SIM only voice and data tariffs later in the summer.
Project Canvas
Project Canvas is the proposed joint venture between TalkTalk and the BBC, ITV, BT, Channel 4, and Arqiva, set up to develop a standards-based, open internet-connected TV platform. Canvas will enable us to offer our customers seamless access to linear TV and video-on-demand, web-based content, HD, and interactive services, all delivered over the internet to the customer's TV.
The OFT ruling and BBC Trust approval during the quarter completed the project's regulatory process, and this will allow us now to proceed with the next phase of development of the project, and step up planning towards a consumer launch by mid-2011.
Outlook
We remain confident that we will report financial results for the year to 31st March 2011 in line with the guidance published in our indicative financial update on 11th May 2010, including delivering 6-8% revenue growth, and 20% growth in normalised earnings per share and dividends per share.
Extracts from the audited accounts for the year to 31st March 2010 have been published today on our web-site www.talktalkgroup.com.
Next trading update
The Group will announce its Interim Results in November 2010.
Conference call
There will be a conference call for investors and analysts starting at 09.00am this morning. The dial-in details are +44 (0) 20 7806 1953 (UK & International excl. USA) and +1 888 935 4575 (USA). The passcode is 1107490. A replay will be available for one week on +44 (020) 7111 1244 (UK & International excl. USA) and +1 866 932 5017 (USA). The passcode for the replay is 1107490#. The call will also be broadcast live at www.talktalkgroup.com.
For Further Information
For analyst and institutional investor enquiries:
David Boyd 44 203 417 1037
Carla Bloom 44 203 417 1051
Christian Maher 44 7900 243 308
For media enquiries:
Mark Schmid 07920 484 787
Anthony Carlisle (Citigate Dewe Rogerson) 07973 611 888
020 7638 9571
| BROADBAND | FY 2009/10 | FY 2010/11 | |||
| Q1(1) | Q2(2) | Q3 | Q4 | Q1 | |
| Customer Net Adds ('000) | 47 | 15 | 36 | 42 | 34 |
| Of which TalkTalk(3) ('000) | - | - | - | 82 | 61 |
| Customer Base ('000) | 2.853 | 4.119 | 4.155 | 4.197 | 4.231 |
| ARPU (£) | 23.30 | - (4) | 23.80 | - (4) | 23.90 |
| Unbundled % | 79% | 72% | 72% | 74% | 77% |
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| NON-BROADBAND |
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| Customer Base ('000) | 1,061 | 1,199 | 1,097 | 999 | 910 |
| ARPU (£) | 20.80 | - (4) | 20.10 | - (4) | 19.30 |
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| TOTAL REVENUE (£m) | 340 | 449 | 446 | 451 | 444 |
| Of which: |
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| BB & non-BB (£m) | 264 | 367 | 365 | 363 | 357 |
| B2B (£m) | 76 | 82 | 81 | 88 | 87 |
(1) Prior to acquisition of Tiscali
(2) Includes acquisition of Tiscali base and customer base adjustment
(3) Includes former Tiscali customers now re-branded to TalkTalk
(4) Not previously disclosed on quarterly basis