Alternative British broadband provider TalkTalk has published its financial results for the year ended 31 March 2014, revealing a 3.4% year-on-year increase in revenue, driven by a solid uptake of its pay-TV service.
In the year under review, TalkTalk generated total turnover of GBP1.727 billion (USD2.74 billion), up from GBP1.670 million in FY 2013, while it noted that, having recorded revenues of GBP448 million in the first three months of 2014, this represented the fifth consecutive quarter of y-o-y revenue growth. On-net revenues were up 7.2% year-on-year in the final quarter of the group’s financial year, meanwhile, driven by ‘base growth (including Post Office customers), ARPU progress from disciplined pricing and new product penetration, partly off-set by mix and promotional investment’. Headline earnings before interest, tax, depreciation and amortisation (EBITDA) for the full-year period stood at GBP213 million, however, down from GBP290 million a year earlier after GBP112 million of incremental investment in growth.
Looking ahead, TalkTalk has said that it expects turnover to grow by at least 4% in FY 2015, driven by modest growth in customer numbers and ARPU, and growth in TalkTalk Business revenues. It has also said it expects overheads as a percentage of revenue to fall below the level reported for FY13, while based on current volume expectations and falling costs-per-add for both broadband and TV customers, it has forecast lower subscriber acquisition and marketing costs, which in turn will drive ‘strong growth’ in headline EBITDA.
As at end-March 2014 TalkTalk’s broadband subscribers totalled 4.196 million, up from 4.063 million a year earlier, with 4.060 million of those classified as on-net (up from 3.870 million at end-March 2013). The number of customers taking up the operator’s fibre broadband add-on option has also continued to increase, rising from 73,000 at the end of FY 2013 to 207,000 a year later. Mobile voice accesses also rose, from 175,000 at end-March 2014 to 284,000 a year later, but it was in the pay-TV arena where the company was keen to trumpet its achievements. Having added 185,000 TV customers in the final three months of its financial year to bring its total to 917,000, it claimed to have grown faster than all other UK TV operators put together, while it confirmed that its subscriber base surpassed the one million mark on 12 May 2014.
Commenting on the group’s annual performance, TalkTalk CEO Dido Harding said: ‘I am delighted to report our first full year of revenue growth since demerger demonstrating that our strategy for growth is delivering. We have built a TV business with over one million customers in just 18 months – a quarter of our total customer base … Following investment in the first half, we delivered a sharp rebound in profitability in the second half combined with accelerating revenue growth. We are on track to deliver our financial targets by FY17, and are increasingly excited about the longer term growth opportunities beyond. As a result we are committing to another year of growing the dividend by no less than 15% in FY15.’