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TalkTalk UK Tops 4.25 Million Broadband ISP Subscribers and Eyes 40Mbps Service

Posted: 16th Nov, 2010 By: MarkJ
talktalk uk broadband and mobileInternet and phone provider TalkTalk ( AOL UK , Tiscali , Opal ) has revealed its half year (H1-2010) results to 30th September 2010, which saw their broadband ISP subscriber base grow from 4,231,000 in Q1-2010 to 4,249,000 (+18,000) in Q2. This represents yet another significant reduction in growth for TalkTalk, which added +42,000 in Q4-2009 and +34,000 in Q1-2010.

Presently 81% of TalkTalk's broadband customers are using the groups cheaper unbundled ( LLU ) platform (up from 77% in Q1-2010), which is delivered via 2,003 unbundled exchanges (80%+ UK population coverage). TalkTalk plans to roll-out its network to an additional 700 exchanges over the medium term, which will bring the service to a staggering 93% of the UK population! Further than any of its unbundled rivals.

Dido Harding, CEO of TalkTalk, said:

"TalkTalk now has by far the UK’s largest Next Generation Network, a base of 4.25 million broadband and voice customers, and an innovative and growing brand. It has achieved this by entrepreneurial initiative, organic growth and acquisition. Now TalkTalk is able to start fully realising the potential of this scale, for the benefit of shareholders as well as customers.
Accordingly we have developed our strategy to do just this.

We are well on track to complete our 'One Company' integration programme by the end of the year. Our integration programme is delivering higher than expected synergy benefits and we are now raising our synergies target to £55 million."

The operator also intends to launch its own broadband TV ( IPTV ) service around mid-2011 by using the recently cleared YouView ( Project Canvas ) platform, which it hopes will help to drive a 2% revenue CAGR.

However they'll need to put more effort into the TV service than their Vodafone (Mobile Virtual Network Operation) based mobile phone and Mobile Broadband solutions, which weren't properly promoted and offer only a very limited choice.

Dido Harding, CEO of TalkTalk, added:

"Like all companies that have grown as quickly as TalkTalk, there are considerable opportunities to improve the efficiency and effectiveness of the business. We see real opportunities to deliver an additional £40-50 million of operating efficiencies, and over the medium term to drive our EBITDA margin to 20%.

Over the same time frame we will drive sustained top line growth, adding innovative and attractive new services, to become the UK’s best value provider of quad-play phone, broadband, mobile and TV services."

We note that TalkTalk also admits to seeing an "increase in churn" on its "acquired bases" in the second quarter, which it attributes to the problems that "some customers experienced" during migration of their network access and e-mail servers.

The email episode in particular caused a huge uproar during October (here), with TalkTalk failing to recognise customer concerns or tackle the problem quickly enough. Earlier this month TalkTalk was also given a slap on the wrists by Ofcom for their many billing woes (here). Suffice to say that it has been a difficult quarter.

As it stands TalkTalk's H1-2010 broadband revenue has grown by 24.0% to reach £615m, with total revenue up 12.4% to £887m. Likewise individual customer broadband ARPU grew to £24.70 per month, which is up from £23.90 in the previous half.

It's already looking like 2011 will be a better year for TalkTalk, and the ISP has just revealed plans for a future "super-fast" broadband service using BT's 40Mbps FTTC technology. O2 and Sky Broadband cannot now afford to sit still while their main rivals are breaking out faster services.
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