Growth Spurt as UK ISP TalkTalk Reaches 4.186m Broadband Subscribers

Budget communications provider TalkTalk has seen its strongest quarterly growth in broadband subscribers yet, fuelled by additions from their new deal with the Post Office, after the operator added +110,000 customers during Q4 2013 (calendar) to reach a total of 4,186,000 (up from just +5k added in Q3 2013).

Readers might recall that TalkTalk recently took over the management of the Post Office’s home broadband and phone service (here), which use to be handled by BT. The related network migration, which didn’t go without problems (here), has now been factored into TalkTalk’s results and equates to +103,000 subscribers (i.e. TalkTalk’s own base actually grew by just +7k in Q4 2013).

Meanwhile TalkTalk’s Superfast Fibre Broadband (FTTC) service saw a slightly slower growth by adding +35,000 in the quarter to total 177,000 subscribers, which compares with the +47k added during Q3 2013. Never the less this is still much better than the +22k added in Q2 and +21k in Q1.

Dido Harding, CEO of TalkTalk, said:

“We are delighted with the material step up in our revenue growth during the quarter, which shows the powerful effect of combining a modestly growing customer base, disciplined pricing and promotional activity, and strong new product growth particularly in TV. In TalkTalk Business, we saw a strong acceleration in data products growth and successfully migrated Post Office customers onto our network.

As a result this has been another quarter of successfully delivering against our objectives; we are confident that we are building a business with strong and sustainable revenue momentum and growing profitability. We are on track to deliver our FY14 guidance and our medium term targets of 4% revenue CAGR (FY14-17) and 25% EBITDA margin by FY17.”

Elsewhere TalkTalk’s YouView based TV (IPTV) service added +175,000 new subscribers during Q4 2013 (total 732,000), which is up from the +167k added in Q3. In additional another 35 telephone exchanges were also unbundled (LLU) from BT’s network (total 3,014), although interestingly the number of TalkTalk subscribers that still use a BT-only line has increased from 148,000 in Q3 to 151,000 in Q4 2013 (the first increase in at least three years).

On the financial front TalkTalk saw its total quarterly revenue grow from £422m in Q3 to £436m in Q4 2013 and churn dropped from 1.7% to 1.6% over the same period. The operator also hopes to show further improvement by saving another £40m come FY17 through various cost saving developments (e.g. reducing the complexity of their systems, making better use of data and driving a self-service model).

In related news TalkTalk has also extended its TV content partnership with Sky (BSkyB) for another 3 years. Meanwhile Sky will improve the availability of its Internet TV product, NOW TV, via TalkTalk’s Youview platform.