UK ISP TalkTalk Tops 4.236M Broadband Subscribers and Sells Off-Net Base

Low cost ISP TalkTalk has today published their latest results for Q4-2014 (calendar), which reported that broadband subscribers increased at the stable rate of +15K (same as in Q3) in the quarter to total 4,236,000 and “Superfast Fibre Broadband” (FTTC) surged forward by +88K (up from +67K in Q3) to account for 396,000 of that total.

It’s likely that most of the extra FTTC uptake has been strongly driven by the ISPs current “half-price fibre” promotion, which means FTTC is just £5 per month instead of the usual £10. “While it is clear that at the right price, customers see value in the proposition, penetration remains modest at under 10%,” said TalkTalk while also welcoming Ofcom’s recent margin squeeze test, which they hope “in time … will lead to lower wholesale fibre costs“.

Meanwhile there was a small update on their roll-out of 1000Mbps capable Fibre-to-the-Premises (FTTP) broadband in the city of York, which is being conducted alongside Sky Broadband and CityFibre. “[We] continued to make progress during the quarter with the commencement of civil engineering work including the laying of our first microtrenched fibre runs. We remain on track to connect the first customers onto the network later this year, and are excited about the longer term roll-out prospects,” said the ISP.

The other notable bit of news, which was hidden deep within TalkTalk’s results and could have easily been overlooked, is that they’ve finally reached an agreement for the disposal of their off-net broadband base (i.e. 108,000 customers on BT’s platform instead of LLU) to Fleur Telecom (Daisy Group) and “the transaction [is] expected to complete before the end of Q4 FY15” (i.e. spring 2015).

But the above off-net loss will largely be balanced by TalkTalk’s recent gobble of Virgin Media’s off-net LLU base and Tesco’s Home Broadband LLU subscribers. Last year STL Partners valued TalkTalk’s own off-net subscribers at less than £10m.

Dido Harding, CEO of TalkTalk, said:

“Today’s results demonstrate the strong and growing demand for our value-for-money products, as we saw our strongest ever quarter of TV, mobile and fibre adds with our lowest ever reported churn.

We are excited about the future of quad-play. TalkTalk is ideally positioned to push home its strategic advantage in an industry undergoing major changes. Our customers recognise the significant savings they can make on all four products from TalkTalk. We have the largest unbundled network in the UK, a new long-term mobile access agreement, and one of the broadest ranges of film and TV content, all of which is underpinned by a pro-competition regulatory environment.

We remain confident in our plans for delivering sustainable growth and a more profitable business over the medium term, and remain on track to deliver our FY17 targets.”

Elsewhere TalkTalk’s YouView (IPTV) based TV product continued their steady growth by adding +115,000 (same as Q3) customers in the quarter to total 1,332,000 and their Mobile customers increased by +50,000 (up from +40K in Q3) to total 398,000, although most of the extra mobile growth is probably due to the ISP bundling a FREE SIM with their top Plus TV package.

On the financial front TalkTalk reported quarterly revenue of £449m (up from £437m in Q3) and churn reduced from 1.4% in Q3 to 1.3% now. Churn will fall further once their old off-net base is sold because that accounted for much of the on-going customer bleed.

TalkTalk also said that their customers downloaded an average of 55GB (GigaBytes) during December 2014, which doubles to 114GB on their FTTC packages.