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ISP TalkTalk Updates UK FTTP Plan for Openreach and Cityfibre

Tuesday, July 21st, 2020 (8:21 am) - Score 4,437
talktalk uk broadband isp logo 2020

UK ISP TalkTalk has today published a brief trading update to 30th June 2020 (Q1 FY21 financial), which saw them add (net) another 67,000 customers to their “fibre” (mostly FTTC) broadband base in the quarter (vs 118K in Q1 FY20). We also get an update on their “full fibreFTTP launch plan for Openreach and Cityfibre products.

At this point it should go without saying that the April to June 2020 period is likely to be the worst affected one by the COVID-19 related lockdown measures. Suffice to say that this quarter should be taken with a pinch of salt because its results may not be terribly reflective. However, in TalkTalk’s case that discussion may be academic since their Q1 trading update is always very light on detail.

NOTE: TalkTalk has a total broadband base of 4.2 million customers (2.4m on “fibre“), as well as 3,000+ unbundled BT exchanges and 42,600 Ethernet connections.

As usual the growth in their fibre base is positive, albeit significantly down on last year, but we should caveat that this doesn’t tell us how many broadband customers may have left their slower ADSL based copper broadband plans or even upgraded to FTTC from those. But they did also deliver their “lowest ever” on-net churn of 0.68% (Q1 FY20: 1.29%), which may suggest that existing subscribers stayed fairly loyal.

Furthermore, it’s noted that 84% of new consumer customers took a “fibre” product (Q1 FY20: 70%) and 59% of those opted for the faster 80Mbps FTTC tier (Q1 FY20: 39%). TalkTalk also has some FTTP customers on their Cityfibre owned FibreNation patch in the city of York and a few other towns, but they rarely include a separate split for those results.

FTTP Launch Plans

We’ve previously reported that TalkTalk intended to launch their first ever Fibre-to-the-Premises (FTTP) based ultrafast broadband packages to consumers in July 2020 (here) and today’s update reiterates that position with a brief statement: “Our Full Fibre plans continue at pace with Openreach FTTP launching in July, bringing likely price inflation.” As there are only ten days left this month then we shouldn’t have long to wait.

Similarly, there’s been a small but useful update on their position with respect to Cityfibre’s growing FTTP network. Readers may recall that TalkTalk sold their own FTTP network (FibreNation) to Cityfibre earlier this year for £206m (here), although as part of that deal they retained favourable wholesale access to that side of the network.

The bigger question has been when we might see TalkTalk’s products become available on other parts of Cityfibre’s FTTP network (i.e. those outside the FibreNation area). Today’s announcement states that the ISP will be able to launch products in Aberdeen, Bolton, Milton Keynes, Newcastle and Peterborough “later this year” (it’s unclear if they mean a financial or calendar year – their financial year runs to March 2021). Other cities will follow.

Other Stuff

Elsewhere growth in the provider’s Ethernet base was predictably hit by COVID-19 (a lot of related installs were stopped or delayed), although it still managed to grow by 0.4k (Q1 FY20: 1.0k). Some 41% of new orders were also for the higher ARPU 1Gbps lines (Q1 FY20: 33%). “Ethernet order volumes and installs in June have recovered from lower levels in April and May, and now exceed the prior year. The outlook remains strong, despite COVID-19,” said TalkTalk.

Finally, we should add that TalkTalk has also signed a new 5-year contract for the provision of IT and network services to the Post Office. In case anybody has forgotten, TalkTalk have long held a managed wholesale arrangement with the PO to help underpin the latter’s broadband and phone packages. This deal is currently still subject to Government approval but that is largely just a formality.

Tristia Harrison, CEO of TalkTalk, said:

“As the UK’s internet usage continues to soar, our role as the UK’s only scale affordable provider of Fibre broadband has become even more important. Given this, we see a positive outlook to H1 and are confident in our full year plan to deliver stable to growing Headline EBITDA with strong cash conversion.

As with many businesses, we have seen a short-term COVID-19 impact primarily due to lockdown trading restrictions and cancellation of live sports. Revenue, Fibre net adds and ARPU trends have all improved in June and July as lockdown restrictions have eased. Encouragingly customer payment trends are in line with the pre-COVID-19 period and we continue to see an ever-increasing demand for our higher speed Fibre and Ethernet products.

We are also pleased to have launched our new ‘Business Grade Homeworker’ packages for consumers and businesses, as the country adapts to working from home for the long-term. It is early days, but sales are strong. In addition, we are launching our Full Fibre services with Openreach and continuing to sell on the CityFibre Holdings network at scale. The last few months have shown that the Government’s ambition to reach UK-wide Full Fibre penetration by 2025 is more essential than ever before.”

On the financial front the ISP reported headline revenue (excluding Carrier and Off-net) of £358m (Q1 FY20: £387m), which has been hit by COVID-19 (i.e. trading restrictions and cancellation of live sports). Interestingly TalkTalk also mentions that they took a hit from the “ongoing industry-wide declines in Voice usage exacerbated by lockdown,” which is odd since other ISPs reported an abnormal surge in home phone calls during the lockdown.

Elsewhere Tristia Harrison has also called on the UK Government to take “urgent” action in order to ensure that “millions of homeworkers in the North have the tools they need to do their jobs … The Government must therefore invest in broadband and ensure full fibre is both available and affordable across the country as a key part of the economic rebuild.”

Interestingly, Tristia still seems to think that the “Government promised full-fibre rollout by 2025 but at the moment this target is at risk of being missed,” although they watered this down to the more technologically neutral language of “gigabit-capable” last year (i.e. DOCSIS, FTTP, 5G etc.). Nevertheless she is correct about the risk of 2025 being missed and has called for more investment, although right now throwing even more money at the problem won’t make the roll-out itself go any faster (they’ve yet to spend any of the first £5bn committed).

Leave a Comment
8 Responses
  1. Chris says:

    “But they did also deliver their “lowest ever” on-net churn of 0.68% (Q1 FY20: 1.29%), which may suggest that existing subscribers stayed fairly loyal.”

    This is also likely down to COVID too – if you’re stuck at home, why risk the broadband outage caused by switching ISP?

  2. Bliss Semplis says:

    Thanks for a reasonable analysis of what TalkTalk announced, not just a copy and paste of the press release which is common elsewhere.

    They talk of the revenue decline being down partially to sports cancellations, well they’ve stopped selling Sky Sports and Sky Cinema, directing customers to Now TV, so that’s revenue not coming back.

    Boasting of increased fibre uptake is fairly meaningless without knowing how many ADSL customers are lost along the way and, as you say, voice revenue should have been a positive, not negative, driver over this time.

    Cost cutting is the one thing which offsets consistent revenue decline but surely this can’t go on for ever.

    Hard to see the current strategy leading to anything but declining ARPU and stagnant or declining revenue. For many they provide a good cheap service but the business model looks flawed to me.

  3. LBB says:

    What’s happening with the TalkTalk TV service? I’m not seeing the point, especially without any additional channels than Freeview offers.

    Seems renting films is the only benefit left?

    Was this Sky making the wholesale price of premium channels too expensive so they bailed out?

    1. Bliss Semplis says:

      Indeed, the strategy has been to “simplify” the offer and be a value fixed-line provider.

      Mobile has effectively gone and TV receives little love. All the TV developments are from YouView for over-the-top providers such as Netflix, Amazon and Now TV.

      The TV box hasn’t been updated for many a year and lags behind BT’s offer. The multicast TV boosts never moved beyond SD and some major ones have been withdrawn.

      The extras which make customers “sticky” are fading away. So is TalkTalk left just competing on price for broadband? That’s a tough market with big companies with deep pockets chasing your customers.

      Still, those running the companies know more about telecoms than me (I hope) so there could be a master plan I’m missing!

    2. Badem says:

      Bliss, Its coming down to viewing habits, why would you spend time and money negotiating viewing packages for your TV proposition when people use many sites to get their content.

      SD quality etc would have been down to commercial agreements with SKY etc and improving to HD probably at a higher cost point than going direct with SKY.

      Many people now go to Netflix and Disney Plus to name the two big ones now (•Since Prime is justbpay to get and then pay more for each broadcaster for me content)

      I think the time of Quad and Triple Play is now passed and the focus is on getting faster and stable internet into the home to meet the demands for multiple streamers at 4k UHD etc which traditional copper and hybrid networks struggle with.

  4. Jayson says:

    Looks like it’s gone live today


    1. LBB says:

      Thanks Jayson.

      Faster 150 Fibre.
      Router included.
      £28.00 per month fixed.
      18 month term.
      No set up fee.

      * £12.50 charge for customers requiring a new line.
      * Faster 300 Fibre Speed Boost is £10 on top

      ThinkBroadband seems to indicate profiles are: 150/25 or 300/40

      £28 ‘all in’ for 150/25 is a game changer for FTTP if you can get it! [Price in T&C’s]

    2. NE555 says:

      “Faster 150 fibre” is not FTTP, it’s G.Fast

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