TalkTalk claims strong last quarter
TalkTalk has issued a small trading update for the quarter ending 30th June 2016 and it may be that the flat performance which is being described as a strong start to the year by TalkTalk itself is because they expected a worse set of results as confidence in the provider is still being rebuilt after the hacking events of 2015.
The overall number of broadband customers dropped 9,000 in the quarter, but this was balanced by 36,000 net adds on the fibre based products. The end result being revenue was only down -0.4% compared to the same quarter in the previous year.
The FTTH pilot in York continues, but we are a little sceptical about the future of this trial given that while Sky are also involved TalkTalk are much more visible and seem to be talking about it, plus evidence from speed tests seems to show a much smaller number of Sky customers than TalkTalk with speeds above the standard FTTC services.
"We have continued to make good progress with our fibre to the premise (FTTP) trial Ultra Fibre Optic (UFO) in York. The build has passed nearly 11,000 homes to date, with penetration reaching c12% only 3 ½ months after commercial launch, and ramping steadily. Nearly half of the TalkTalk connections are from customers who were not previously with TalkTalk, driving a material increase in our market share in the area. With build costs already established at below £500 per home passed, we are increasingly confident of reaching our targeted penetration rate of 30%-40% and delivering the proof of concept required to expand beyond York."TalkTalk Financials on the York UFO trial
One hopes that this proof of concept will expand to other areas before the 30-40% penetration rate has been reached, otherwise it might be well into 2017 before anywhere other than York starts to benefit and with an ambition to reach ten million premises eventually a slow roll-out will not please anyone apart from BT shareholders. While the CityFibre model sees the residential roll-out of FTTH as the icing on the cake, with the core network model relying on council and business users we suspect that if the various Gigabit Cities don't seem a big move on consumer FTTH the open arms welcome may shift to a less welcoming one.