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UK ISP TalkTalk Broadband Subscriber Decline Slows to 4.066 Million

Thursday, May 17th, 2012 (8:44 am) - Score 984

Internet and phone provider TalkTalk (AOL UK) has today released its latest results to 31st March 2012 (Q4), which saw their broadband subscriber base decline by -13,000 in the quarter to reach a new total of 4,066,000. That’s a significant improvement on the -43,000 lost during the previous Q4-2011. The ISP also revealed growth in its new superfast broadband service.

TalkTalk also claims to be seeing “accelerating demand” for their superfast broadband (Fibre Broadband Boost) packages, which offer download speeds of up to 40-80Mbps (Megabits per second). The provider claims to have added +4,000 additional customers in the quarter, which would give them a total of 9,000.

Separately TalkTalk’s plans to launch a YouView (IPTV) based broadband TV service still appear to be on-track for launch this summer (Q2 or Q3) and as a result of this they plan to increase their network capacity by “over 100 times” during the next 5 years. This will also help the provider to keep pace with growing data demands from their broadband platform.

Dido Harding, CEO of TalkTalk, said:

We have delivered our 20% EBITDA margin target significantly ahead of schedule. Our focus on improving customer service has driven a real improvement in customer numbers and we are on track to deliver total customer growth in the current quarter. Our strategy has delivered a materially more profitable and stable customer base and a leaner, more efficient cost structure, giving us a strong platform from which to invest in growth opportunities such as YouView.

We are underscoring our confidence in the long term prospects for the business by raising our medium term EBITDA margin target to 25% and a commitment to grow the FY13 and FY14 dividend by at least 15% per annum, while at the same time investing in growth. We will achieve our growth and margin targets through continued expansion of our network, further operating efficiencies, adding more services to become a genuine quad play, growing scale in our business to business operations and increasing our sales of superfast broadband. We believe the successful implementation of this strategy, supported by our financial strength, will deliver significant customer and shareholder value.”

Separately TalkTalk managed to unbundled (LLU) a further 170 telephone exchanges away from BT in Q1-2012 (total network coverage of 2,508 fully unbundled MPF exchanges or 91% of the country; expected to reach 93% within the next year). According to the ISP, fully unbundled MPF exchanges save money and provide “50% greater value to the group over their lifetime than partially unbundled (SMPF) customers” (i.e. where BT still retains some control of the line).

TalkTalk Statement (Broadband Platform Distribution)

As a result we added 100,000 net new MPF broadband and voice customers in the quarter, offset by the net loss of 23,000 SMPF broadband-only customers, leading to net growth in our on-net base of 77,000. The off-net base continued to decline with 90,000 fewer customers contributing to a total broadband customer reduction of 13,000 during the quarter. The off-net base now comprises c.300,000 customers, compared to c.600,000 a year ago.

On-net customers now comprise 92% of our total base and the mix of customers on the base has continued to improve, with 82% now fully unbundled (MPF) and therefore able to benefit from our added value products such as Plus and HomeSafeTM, compared to just over 76% at the end of Q4 last year.

TalkTalk said during February 2012 that they remained “confident” of a return to growth during the first half of calendar year 2012 and today’s results would appear to support that goal, although much will depend upon their ability to make a future TalkTalk TV service profitable (the cost of developing it has been significant).

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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