TalkTalk reports 3% y-o-y revenue decline in FY17 as subscriber numbers dip

10 May 2017

British multi-service operator (MSO) TalkTalk has published its financial results for its fiscal year ending 31 March 2017, revealing a 3% year-on-year decline in turnover.

In the year under review, TalkTalk generated revenues of GBP1.78 billion (USD2.3 billion), down from GBP1.84 billion in 2016, of which on-net revenues represented the lion’s share at GBP1.34 billion (FY 2016: GBP1.39 billion). According to the company, the 4% annual decline in on-net revenues reflected its lower average customer base during the year, while it noted that on-net ARPU was 1.3% lower in FY 2017 at GBP28.2, attributable to ‘the higher proportion of wholesale customers on the base, and during H2, the dilutive impact of Fixed Low Price Plans’. More positively, TalkTalk recorded corporate revenue growth of 3.4% in the period under review, driven by turnover from data services (+31% y-o-y), while annual growth from ‘Data and Next Generation Voice’ revenues of 20% helped offset an almost 18% drop in ‘Legacy Voice’ turnover.

Meanwhile, headline EBITDA stood at GBP304 million in FY 2017, up from GBP260 million, driven by a ‘significant improvement in subscriber acquisition costs (SAC) and marketing’, coupled with a GBP34 million saving from the company’s ‘Making TalkTalk Simpler’ transformation programme. Operating profit in the fiscal year totalled GBP95 million, up from GBP38 million in FY 2016, with net profit increasing significantly, from GBP2 million to GBP58 million.

In operational terms, at the end March 2017 TalkTalk had 3.95 million on-net customers, down from 3.99 million a year earlier, with an increase in the wholesale base (up 129,000 y-o-y) only partly offsetting a decline in retail accesses, which fell by 178,000 in FY 2017. The company meanwhile highlighted what it called ‘strong take-up’ of its fibre broadband and mobile services, with the number of people subscribed to the former increasing by 223,000 to 927,000, and now representing more than a quarter of the total on-net base. Mobile accesses were up by 214,000 in FY 2017, meanwhile, at 913,000, though TalkTalk’s pay-TV subscriber base contracted by 101,000 over the same period. As at end-March 2017, 42% of TalkTalk’s on-net base were said to be dual-play customers, while 30% and 12% were triple-play and quad-play, respectively.

TalkTalk also used the financial filing to note that it has made ‘excellent progress’ with its fibre-to-the-premises (FTTP) trial in York, confirming that the initial rollout to more than 14,000 premises was completed in March 2017. According to the operator it has achieved a penetration rate of 27% for serviceable homes, with build costs were said to be under its GBP500 per home target, and take-up and customer satisfaction also ahead of targets. Following the success of this first phase, TalkTalk said it has now begun the planning work for extending the fibre infrastructure to a further 40,000 premises across the rest of York.

United Kingdom, TalkTalk