TalkTalk Group results for six months to 30th September 2011
TalkTalk has published its latest set of financial results, which reveal the group has ADSL2+ available from some 2,208 exchanges covering 89% of the UK population, making it the largest ADSL2+ network in the UK. 171 exchanges were added in the last quarter, a big jump from the 30 in the previous quarter.
TalkTalk has some 4,129,000 broadband customers, which in the last quarter was a decline of some 43,000 customers. They added 83,000 fully unbundled customers, but lost 57,000 from shared LLU, off-net (i.e. using BT Wholesale) showed a loss of 69,000 customers. The off-net declines represents a 52% reduction in customers served by BT Wholesale since Q1 2010/11. While the group lost broadband customers overall and revenue declined by 4.8% in the first six months of 2011/2012, profits after tax were up by 36% from £50m to £68m for the same period twelve months ago.
The Fibre Boost product that costs £10 per month on top of the usual subscription has some 3,000 customers, but demand seems to be increasing with new connections running at 300 per week. Additionally TalkTalk has announced a price of £15 for the boost that will offer up to 80 Mbps connections, rather than the current up to 40 Mbps. This is expected to be available in January 2012. TalkTalk suggests that they view IPTV as the big driver of growth in the future. There are most likely two reasons - fibre can provide the capacity to stream TV without affecting downloads/gaming and the higher speeds offer the potential for decent high-definition (HD) picture quality. TalkTalk is part of the consortium YouView which is expected to launch in Spring 2012. The company may have a lot of work to do to build up their YouView based IPTV service to match the TV services available from Sky and Virgin.
While their ADSL2+ network is the largest in the UK, they are not sitting back and continue to unbundle exchanges with a target of 450 exchanges for the year. Most likely a big part of the drive behind this is the lower operating costs of a fully unbundled service.
The HomeSafe content filtering option that is network based, thus works for all devices using the TalkTalk broadband connection has been used by some 200,000 customers since its launch in May 2011. The customer is in control of what categories of sites are blocked, and when visiting a blocked site you do receive a page informing you the site was blocked, making it obvious the non-appearance of a page was deliberate and not a fault. For households with varying ages of occupants, the system is not ideal, as each category is either blocked or not, and no time based switching off/on of the blocking is possible. A simple watershed type approach so that older children still living at home can access social networking sites for example after 9pm would be a useful extension.
The financial results do not reveal which sub-companies are gaining or losing customers, but based on a cross section of what is said on our forums, we expect these losses to be mainly from the Pipex, Nildram and Tiscali brands. The results reveal an expectation that decline that has been happening since Q2 2010/2011 will flatten out and return to net growth in the next few quarters.