TalkTalk revenue rises 4.1% in Q1, adds 80k broadband customers
TalkTalk posted a jump in first-quarter revenue on Tuesday as customer numbers grew and the company said it was on course to add another 150,000 new customers this year.
In the three months to 30 June, revenue rose 4.1% to £382m as the company added 80,000 net broadband customers, taking the total to 4.22m. This was down from the 109,000 it added in the final quarter of the previous year but up from the 20,000 added in the same quarter of last year.
On-net revenue, comprising consumer, wholesale and direct B2B broadband, was up 3.7% on the year to £309m. Meanwhile, the company said churn - which is the rate of customers switching to another provider - remains low at 1.28% for the quarter versus an average of 1.22% for the previous year.
TalkTalk said it saw "excellent" growth in wholesale, which offset a modest decline in retail. In addition, the company said it remains on track to deliver growth in both bases for FY19, having made an encouraging start to trading in July.
Chief executive Tristia Harrison said: "We are pleased to have delivered strong customer and headline revenue growth in the first quarter and we remain firmly on track to deliver at least 150,000 net adds this financial year.
"After resetting the business last year, we are now a much simpler, lower-cost business. As our strategy to be the UK's leading value provider of fixed connectivity continues to deliver, we are on course to report headline revenue growth, stable average revenue per user and a 15% year-on-year increase in headline earnings before interest, taxes, depreciation and amortisation. Alongside the core business we continue to make good progress on our plans for full fibre (FTTP)."
Neil Wilson, chief market analyst at Markets.com, said: "All this is broadly in line but the real focus is tomorrow’s AGM and what investors will say about the £200m rights issue earlier this year. We’re also eyeing the potential sale of the business and with shares still at multi-year lows the appeal of a growing subscriber base is important, albeit at the expense of margins."
Meanwhile, Russ Mould, investment director at AJ Bell, said: "Sometimes companies set themselves such a low bar that it is difficult not to clear it. Broadband provider TalkTalk is a case in point, with its share price rising sharply as it commits to full year guidance in a first quarter trading update.
"This is underpinned by the addition of 80,000 new broadband users in the period. This customer acquisition has come at a cost, with lots of them on fixed low-cost plans. Notably, average revenue per user fell slightly year-on-year.
"There is also a slight uptick in the proportion of customers leaving TalkTalk, which suggests the positive sentiment created by today’s update might be short-lived."
Mould added that Wednesday's annual general meeting could be a test for management as it looks to defend a £200m rights issue earlier this year.
At 1200 BST, the shares were up 8.1% to 118.80p.