TalkTalk Announce Results

Interim results from TalkTalk Group show headline EBITDA(1) up 25% to £276m (FY 2010: £221m) and revenues up at £1,765m (FY 2010: £1,686m).

Charles Dunstone, Chairman of TalkTalk commented, “During this first year since our demerger we have seen the benefits of our growth and scale being delivered in the form of strong earnings and cashflow growth. From FY 2012 our dividend policy will reflect our progress and the strength of our cash generation, and we aim to distribute 50% of our headline earnings per share as regular dividends.

It has been a year of intense activity for TalkTalk, as we successfully completed the integration of the former Tiscali business, re-focused our strategy, extended our network coverage, and launched a major restructuring to make our business more efficient. These far-reaching changes will enable us to offer a better experience for all our customers, and will build a strong base on which we can continue to grow our revenue and profitability.”

Dido Harding, Chief Executive of TalkTalk commented, “This was a strong all-round performance in a year of major change across the business. We delivered EBITDA growth of 25% and grew operating free cashflow by 31%. We ended the year with 3.6m customers on our own network, 86% of our total broadband base, and with broadband ARPU 6% higher than at the same time last year, at £25/month.

All the major elements of our programme to integrate the former Tiscali business were completed by the year-end, and we achieved our target of £55m of synergies. During this process a number of customers suffered disruption, which caused higher levels of complaints and churn. We have worked hard to mitigate the impact of this disruption, and we are confident that we are now making major progress in improving the experience for our customers, which will lead to lower churn.

We launched a new strategy in November and have made good progress putting this into effect. We are pushing ahead rapidly with plans to unbundle a further 700 exchanges and get at least 93% of our customers onto our network. We have carried out a major restructuring to create a leaner, simpler organisation, which will generate £25m of operating efficiencies and is the first step towards our target of £40-50m of annual savings.

TalkTalk is all about giving customers consistently the best value-for-money experience in the market, and we are reinforcing this commitment today by cutting the price for all our Essentials and Plus customers to £6.50 and £14.50 respectively, and including our unique, free HomeSafe service in these products.

We exited the year with momentum, and we intend to build this further through the year and make major progress towards our medium-term targets of 20% EBITDA margin and 2% revenue CAGR. In the year ahead, our continuing focus on unbundling and restructuring, and on giving our customers best value-for-money services, will enable us to grow our EBITDA margin to 17-18%.”

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