TalkTalk sales up 4.2 per cent as quad-play interest grows

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50,000 customers joined Talk Talk MVNO during Q3, with 15,000 new broadband connections and 115,000 more pay TV households

TalkTalk’s total revenue increased by 4.2 per cent year-on-year during its third quarter as it posted its strongest ever aggregate take up of TV, mobile and fibre.

The broadband provider posted total revenue of £449 million for the three months leading up to the end of December, up from £431 million in the previous year.

TalkTalk added 15,000 broadband customers in the quarter, along with 50,000 mobile customers and 115,000 pay-TV households. It said around 10 per cent of its broadband base now take superfast packages, despite the additional cost.

The 4.2 per cent increase in sales had left TalkTalk ahead of target, according to CEO Dido Harding, who said customers had began to recognise the benefits of taking quad-play bundles.

“Today’s results demonstrate the strong and growing demand for our value-for-money products, as we saw our strongest ever quarter of TV, mobile and fibre adds with our lowest ever reported churn,” Harding said.

“We are excited about the future of quad-play. TalkTalk is ideally positioned to push home its strategic advantage in an industry undergoing major changes. Our customers recognise the significant savings they can make on all four products from TalkTalk.

“We have the largest unbundled network in the UK, a new long-term mobile access agreement, and one of the broadest ranges of film and TV content, all of which is underpinned by a pro-competition regulatory environment. We remain confident in our plans for delivering sustainable growth and a more profitable business over the medium term, and remain on track to deliver our FY17 targets.”

It wasn’t all good news for TalkTalk with Harding blaming a failed IT project for leaving it around £15 million short of targeted cost-cutting measures. TalkTalk was forced to abandon a planned implementation of Salesforce.com’s internet-based customer service software, which was expected to deliver significant savings

Quad-Play

Quad-play, where providers offer bundles that include mobile, fixed line, broadband and TV at a reduced price is becoming increasingly important given EE’s attempts to purchase EE for £12.5 billion and Sky’s announcement that it is to launch an MVNO using O2’s wholesale network.

Last month TalkTalk confirmed the £5 million purchase of Tesco TV service Blinkbox and Tesco Broadband in a deal that saw 75,000 new broadband customers join the broadband provider. Blinkbox-quad-play-web

TalkTalk’s own budget TV service has more than 1.3 million customers before the Blinkbox acquisition, though it expects to make a losses of between £3- £5 million from its TV services as Blinkbox is integrated.

Kantar WorldPanel consumer insights director Imran Choudhary said Talk Talk had seen a lot of success appealing to students and older buyers.

According to research from Kantar, one in five of TalkTalk’s new customers are students, and another fifth of the net adds are retired.

Choudhary said: “TalkTalk has shown strong growth across its product range, in the last half year, but particularly in the last quarter of 2014. The type of consumer it is particularly appealing to are the very young or the very old.

“These groups only make up one in 10 of Sky’s new customers, signalling that TalkTalk have forged out their own space and identity within groups of consumers who are looking for great value on a budget.

“However TalkTalk still has a lot of work to do within the lucrative 35-44 year old traditional Family households where Sky and Virgin dominate. Adding value to these families will lie less with pricing, but more with content, and the acquisition of BlinkBox should help TalkTalk make inroads here.”

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