Investment in pay-TV service sees TalkTalk report lower net profit in FY13

17 May 2013

Alternative British fixed line services provider TalkTalk has published its financial results for the year ending 31 March 2013, revealing a 17% year-on-year drop in net profit to GBP132 million (USD209 million). The decline was partly attributed to the company’s investment in the launch of its new pay-TV service, and while capital expenditures in the twelve-month period were actually marginally lower at GBP104 million (down from GBP105 million in FY12), TalkTalk spent a further GBP62 million on its ‘YouView’ service. Turnover in FY13, meanwhile, fell by 1% to GBP1.67 billion, although the company was keen to note that less profitable off-net services now account for less than 10% of revenues. Underlying EBITDA – which excluded TalkTalk’s TV investment – stood at GBP352 million, representing an 11% increase against the previous fiscal year, while headline EBIDTA fell by 11% y-o-y to GBP290 million.

Operationally, at the end of March 2013 TalkTalk’s total broadband subscriber base stood at 4.063 million, down marginally from the 4.066 million it reported a year earlier, though notably the company returned to customer growth in the second half of the year, after several quarters of shedding subscribers. Demand for fibre was, the company said, ‘building gradually’, with 73,000 customers having opted for the paid-for add-on which boosts speeds up to 76Mbps. Over the year under review TalkTalk noted that it added 115,000 net new on-net customers, comprising growth of 229,000 in fully unbundled phone and broadband customers, and a net loss of 114,000 broadband only customers. YouView uptake, meanwhile, saw some momentum, with 230,000 customers having signed up for the service by the end of March 2013, more than double the 80,000 reported at end-December 2012. Having also launched a mobile voice product in August 2012, TalkTalk confirmed that 175,000 customers had taken up the service by end-March 2013.

Commenting on the company’s performance over the year, TalkTalk CEO Dido Harding said: ‘This has been a momentous year for TalkTalk, which is now a fundamentally better business than it was three years ago. In the year we have returned our customer base to growth, successfully launched TV and mobile handsets, grown TalkTalk Business, and returned to year-on-year revenue growth in the final quarter … We will continue to invest in growth and remain confident that having more customers who buy more products and who stay with us longer, puts us firmly on track to achieve our medium term financial targets.’

United Kingdom, TalkTalk (incl. FibreNation)