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TalkTalk Unveil UK FTTH Rollout Plan as Broadband Users Top 4.24M UPDATE

Wednesday, Nov 21st, 2018 (7:45 am) - Score 5,698

The latest trading update from TalkTalk has revealed that the ISP increased their on-net broadband customers to total 4,243,000, which is up by +24K during quarter to the end of Sept 2018 (vs +80k in the previous quarter). On top of that they’ve unveiled the “FibreNation” roll-out plan for their “full fibre” (FTTH) network.

The past quarter has been a quiet one for the low cost ISP. So far the only real development of note was their decision to introduce a Great Connection Guarantee for new customers of their FTTC based “Faster Fibre” broadband services, which essentially enables customers to leave penalty free within the first 30 days of their service going live “if they’re not fully satisfied” (here).

Otherwise the provider today reported that they added +192,000 new “fibre” customers during the past six months (up from +188k in the previous 6 months). Overall 54% of their new customers are choosing to take a fibre service (up from 44%), although we should remind readers that this is dominated by their Openreach based FTTC  (hybrid fibre VDSL2) network and only a small FTTP deployment in York.

At the start of this year TalkTalk also announced tentative plans to roll-out a 1Gbps capable Fibre-to-the-Home (FTTH) network to 3 million UK premises, which was supported by an investment £1.5bn (here). This required them to establish a new company, which would be 20% owned by TalkTalk and 80% by Infracapital; the latter will contribute £400m and TalkTalk £100m (plus they will then take on c.£1bn in debt).

Sadly the provider has been almost completely silent on this proposal since it was announced, but today’s report confirms a number of significant developments.

TalkTalk’s Key FTTH Developments

* The ISP has setup FibreNation as a wholly owned full fibre wholesale provider to oversee construction of the new full fibre network and supply related services to providers.

* The ISP confirms that their deal with Infracapital appears to have stalled (i.e. they “will not be progressing on the basis of the Heads of Terms, announced in February 2018“), which we believe relates to the recent reports concerning how the two sides were locked in a dispute over a valuation of the future network (here). However they’re still “in discussions with potential partners, including Infracapital, to develop an appropriate long-term capital structure for FibreNation.”

* Despite the above situation, FibreNation expects to initially be rolling out full fibre to at most another 60,000 homes (it’s actually stated as between 50K to 60K) in three towns and cities: Harrogate, Knaresborough and Ripon. This will take place within the “next 12-18 months“.

* When included with their existing “Ultra Fibre Optic” deployment to cover 54,000 premises in the city of York with FTTP (Cityfibre are building this for them), the new plan will expand their overall footprint to over 100,000 homes. The York deployment will of course also become part of FibreNation.

* Interestingly the joint venture originally set up for the York trial and its assets are not being transferred, but Sky Broadband will remain a wholesale customer of the new network in the expanded footprint.

The ISP added that they continue to pursue a “Fibre for Everyone” strategy, which in the short-term means “materially increasing” the proportion of their base on superfast FTTC products and “[we] are also positioned to be an early adopter of future products, such as G.Fast and Single Order Generic Ethernet Access (SOGEA). We made good progress with our G.Fast trial in H1 and are actively engaged with Openreach to ensure SOGEA products are priced to enable fast adoption.”

On top of all this TalkTalk has also announced that it plans to relocate its headquarters from London to Salford (Manchester) to support its next phase of growth (they already have an office in Salford at their Soapworks site and this is due to be expanded), which will affect “several hundred” staff (we think up to 500) but also enable the ISP to reduce some of their costs. The vast majority of London roles will relocate to Salford in 2019.

Tristia Harrison, CEO of TalkTalk, said:

“This has been a strong first half for TalkTalk, with continued broadband base growth and further progress as we become a simpler, more efficient business. Our Fairer Broadband commitment, focus on reliability and unique Fixed Low Price Plans continue to improve customer satisfaction and loyalty, resulting in our lowest ever churn in the second quarter. We remain on track to deliver our plan for the year, with growing Consumer ARPU and increasing revenue leading to strong EBITDA growth.

With core business performance on track, we are today announcing two additional steps to position TalkTalk for the future. We are accelerating our full fibre strategy, launching a new company, FibreNation, which will expand our Gigabit broadband footprint to over 100,000 homes in the next 12-18 months.

As we continue to radically simplify TalkTalk, we will also create a single main campus for the business in Salford. Having a single main home will reduce operational complexity and allow us to become a more efficient, focussed business, in turn supporting our long-term growth.”

On the financial front TalkTalk said their headline net debt was now a hefty £760m (excluding finance leases of £40m) and they delivered headline revenue of £808m for the past six months (up from £801m in the same period last year). Headline profit over the same period hit £425m (up from £408m last year) and they had costs of -£324m (-£333m last year). Operating profit also improved to £29m, which is up from £9m in the same period last year. Churn is currently 1.2% (H1 FY18: 1.3%).

We should point out that the aforementioned broadband figure of 4.24 million reflects their on-net broadband base, while TalkTalk’s closing off-net base amounted to just 33k at the end of Q2 FY19 (Q2 FY18: 55k), which represents less than 1% of the total broadband base.

The big question now is whether or not TalkTalk can secure a partner to help them realise their original aspiration of covering 3 million UK premises with a full fibre network, which we note does not get much of a mention in today’s results (the main figure being talked about now is 100,000+ premises).

A partner is essential for the ISP, which would otherwise merely be adding to their already significant pile of debt. Meanwhile the plan that has been confirmed today, while welcome, is still only a fraction of what smaller providers are currently building toward (Cityfibre / Vodafone, Hyperoptic etc.), and that’s before we even consider the big boys like Openreach or Virgin Media.

Flying solo in such an aggressively competitive market, where overbuild by rivals carries a serious threat and a shortage of skilled civil engineers is already causing problems, can be risky for a provider in TalkTalk’s position.

UPDATE 1:56pm

We’ve taken a look at TalkTalk’s related presentation slides (here), which among other things seems to clearly state that the ISP will seek to become one of the “anchor tenants” for Openreach’s FTTP network (page 27). This is wise but it will also be difficult to mix two very different FTTP networks without confusing consumers.

We also get some useful new network stats.


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 X (Twitter), Mastodon, Facebook and .
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13 Responses
  1. Avatar photo Tempest3K says:

    Just a pity they’ve done the Virgin trick of leaving holes in coverage where they’ve already rolled out. UFO is available all around me, but not on my small road…
    Suspect we’ll see the same in these new areas.

    1. Avatar photo Meadmodj says:

      Yes something Ofcom will need to address as FTTP rivals may simply regard these “islands” as uncommercial if competitors have the wider coverage/market in an area. Ofcom could easily impose a contiguous Post Code coverage clause in their licence in the same way as mobile spectrum now includes coverage obligations. They will also need to consider how provider/ISP FTTP monopolies will be regulated post 2023.

      FTTP could all get a bit messy just like some BDUK maps where slithers of FTTC are surrounded by Gigaclear FTTP. If some gaps in coverage qualify for USO then it just gets even worse.

      None of these providers are benevolent, it’s all about profit and their returns to investors such as Infracapital.

    2. Avatar photo Joe says:

      Doubtless low hanging fruit. Some of this will be covered naturally by infil later. Some of it may just be down to planing/wayleaves etc. Once the market settles a bit doubtless ofcom will inter fear which might be ok if its done with a very light touch but I have my doubts on that…

    3. Avatar photo Meadmodj says:

      Telewest/VM didn’t cover all the premises in my nearest immediate roads so it is quite possible similar islands will appear in FTTP rollouts. Mobilising civils retrospectively is more expensive than done as part of the rollouts.

      You appear to have greater optimism than me.

    4. Avatar photo joseph says:

      No different to BT, i can name roads where they have deployed FTTP and FTTC to only one side of the street, never mind missed roads. NO ISP can supply 100% of an area 100% of the time.

    5. Avatar photo Joe says:

      @Mead: The costs of rollout now are significantly cheaper than when TW/VM were rolling out back in the day.

    6. Avatar photo Yorkiebar says:

      In Clifton by any chance?

  2. Avatar photo Alan Sawley says:

    Great news! But i think it makes sense for TT to undertake their FTTP rollout in ‘baby steps’ due to the risk/capital involved. Unlike Vodafone for example, they haven’t partnered with a major FTTP wholesaler (Cityfibre) who would take most of the hit in case things didn’t work out.

    No doubt ‘FibreFred’ will be along shortly and announce this as fake news lol.

    1. Avatar photo FibreFred says:

      It’s still just talk.

      Whilst others are cracking on 🙂

    2. Avatar photo Joe says:

      The issue with baby steps is if others get their networks built you lose the opportunity perhaps forever.

  3. Avatar photo Alex says:

    Fibre to the Press Release alert!!!

    Looks like macro-trenching to me 🙂

  4. Avatar photo GRAHAM. A A PURSER says:


  5. Avatar photo david worth says:

    Where i live fttp is avialable by expensive bt more expensive zen vodaphone , virgin not interested , plusnet which iuse told me bt the parent company wont let them install fttp in my area

Comments are closed

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