TalkTalk Edges Slowly to 4.076m UK Broadband Subscribers as FTTC Booms

Budget conscious Internet and phone provider TalkTalk has today posted its latest results to Q3-2013 (calendar) and revealed that they only added +5,000 broadband subscribers (down from +8k in Q2 and +10k in Q3) to total 4,076,000. But the uptake of their superfast broadband (FTTC) product has continued to skyrocket.

The overall slowing level of general broadband growth somewhat masks the fact that their Superfast Fibre (FTTC) products have surged once again by adding +47,000 customers in the quarter (up from +22k in Q2 and +21k in Q1) to total 142,000 subscribers. This is at least partly due to improved advertising and the recently revamped line-up of packages, which is now headlined by their new £2.50 a month Simply Broadband service (FTTC costs an extra +£10 on top).

Similarly more and more of the ISPs customers are choosing to take one of their YouView based TV (IPTV) bundles, which saw related subscribers grow by another +167,000 in the quarter to reach a total of 557,000 (up from the +160k added in Q2). Most of these TV and Fibre customers appear to be existing users that have chosen to upgrade and this is exactly what TalkTalk wants as the provider works to avoid bleeding subscribers to rival platforms.

Dido Harding, CEO of TalkTalk, said:

“We are delighted with the progress we have made in the first half. We have the fastest growing TV business in the UK and we now expect to have nearly 1m TV customers by the end of FY14.

Other new products and TalkTalk Business have also performed well and we delivered our third successive quarter of accelerating revenue growth, allowing us to raise our guidance for full year revenue growth from 2% to at least 3%. We are increasingly confident about the opportunity that we have to deliver sustainable growth by bringing affordable connectivity and innovative new products to Britain’s consumers and businesses. As a result we are also raising our guidance for medium term revenue growth, from 2% to 4%.

Our financial performance in the first half reflects the investment we are making in growth. Sustainable revenue growth, a scale TV business and our proven ability to simplify the business to improve our customers’ experience will create a more profitable business, and we are now confident of our ability to deliver a 25% EBITDA margin by FY17.”

Overall a further 181 telephone exchanges were unbundled (LLU) from BT’s telecoms network during the quarter (total 2,979) and 84% of their customers are now on non-BT based fully unbundled (MPF) lines (note: their LLU network now covers 96% of the UK population). The rest still connect via BT’s more expensive platform due to a lack of cheaper unbundled (LLU) network coverage.

Meanwhile total revenue increased slightly from £421 million in Q2-2013 to £422 million now, although the level of churn has risen from 1.4% in Q2 to 1.7% in Q3.