TalkTalk revenue rises amid strong fibre demand
TalkTalk posted a rise in first-quarter revenue on Wednesday thanks to strong demand for fibre products, as it backed its full-year guidance.
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In the three months to the end of June 2019, total headline revenue rose 1.3% to £387m, with year-on-year on-net average revenue per user coming in at £24.72 versus £24.65 the year before, mostly due to increased fibre penetration.
TalkTalk said that 70% of new consumer customers took fibre across the first quarter, up from 44% in the same period last year, with a peak of 75% last month.
Chief executive Tristia Harrison said: "Q1 is in line with our plan. Revenue and consumer ARPU rose year on year, underpinned by very strong demand for faster, more reliable fibre products. Up to 75% of new consumer customers are now taking fibre and we're seeing more customers than ever choose the faster of our fibre products.
"In addition, our ongoing simplification and cost reductions continue to drive improvement in profitability, and we remain on track to deliver EBITDA in line with expectations for the year."
TalkTalk said churn remains low at 1.29% for the quarter compared to 1.28% the year before, while cost savings are on track, with lower wholesale costs due to commercial discounts.
At 0935 BST, the shares were up 3.3% at 109.20p.
Russ Mould, investment director at AJ Bell, said: "For a company with such a troubled history as TalkTalk, saying that earnings guidance is unchanged is cracking news for its shareholders.
"They can breathe a sigh of relief that there aren’t new problems to depress the share price and that the business is getting on with the day job.
"And to its credit, customer churn rates are low, and it has nearly double the number of net customer additions to its fibre products."
Fiona Cincotta, senior market analyst at City Index, said: "TalkTalk is continuing to add customers as more and more households order faster broadband to facilitate their Netflix and Amazon binges. The problem is that competition in the telecom sector is rife and TalkTalk is having to offer relatively low prices to win market share.
"TalkTalk's average revenue per user during the first quarter slightly beat market expectations but it is still lower than it was last year, keeping the pressure on management to trim operating costs."