TalkTalk Telecom Group PLC TalkTalk Trading Update Q1 FY21 (5510T)
July 21 2020 - 2:00AM
UK Regulatory
TIDMTALK
RNS Number : 5510T
TalkTalk Telecom Group PLC
21 July 2020
21 July 2020
TalkTalk Telecom Group PLC
Trading update for the 3 months to 30 June 2020 (Q1 FY21)
Positive H1 trajectory
FY21 outlook; stable to growing Headline EBITDA, strong cash
conversion with reduction in net debt
-- Headline revenue (excluding Carrier and Off-net) GBP358m (Q1 FY20:
GBP387m) (1) . Contraction primarily due to COVID-19 impact (trading
restrictions and cancellation of live sports) and ongoing industry-wide
declines in Voice usage exacerbated by lockdown.
-- The revenue decline, and consequently margin, has been offset by incremental
and ongoing cost savings of a similar amount, with all key cost areas
significantly lower year on year.
-- June and July has seen trading recovery and significant ARPU improvement.
We expect ARPU to continue to improve through the remainder of the
year, driven by growth of Fibre and Ethernet products.
-- Excluding the COVID-19 impacts and Voice usage, Q4 to Q1 revenue and
ARPU would have been flat (Q1 FY21: GBP23.20).
-- B2B Ethernet trading has recovered to pre-COVID-19 levels, with strong
1Gb mix. We have also secured a number of meaningful B2B contract wins
in the period.
-- Our expected FY21 COVID-19 impact of c.GBP15m remains conservative
based on current bad debt trends in both our Consumer and B2B markets.
Tristia Harrison, Chief Executive of TalkTalk, commented:
"As the UK's internet usage continues to soar, our role as the
UK's only scale affordable provider of Fibre broadband has become
even more important. Given this, we see a positive outlook to H1
and are confident in our full year plan to deliver stable to
growing Headline EBITDA with strong cash conversion.
As with many businesses, we have seen a short-term COVID-19
impact primarily due to lockdown trading restrictions and
cancellation of live sports. Revenue, Fibre net adds and ARPU
trends have all improved in June and July as lockdown restrictions
have eased. Encouragingly customer payment trends are in line with
the pre-COVID-19 period and we continue to see an ever-increasing
demand for our higher speed Fibre and Ethernet products.
We are also pleased to have launched our new 'Business Grade
Homeworker' packages for consumers and businesses, as the country
adapts to working from home for the long-term. It is early days,
but sales are strong. In addition, we are launching our Full Fibre
services with Openreach and continuing to sell on the CityFibre
Holdings network at scale. The last few months have shown that the
Government's ambition to reach UK-wide Full Fibre penetration by
2025 is more essential than ever before."
The person responsible for arranging the release of this
announcement on behalf of the Company is Tim Morris, General
Counsel and Company Secretary.
Contacts:
Investor Relations: Tim Warrington +44 (0) 77 7541 4240
Lucy Thomas +44 (0) 77 7963 9460
Media: Dafydd Wyn +44 (0) 77 9870 4841
(1) Q1 FY21 revenue split: Consumer and Wholesale B2B2C
(On-net): GBP293m, B2B (Corporate): GBP72m (Data: GBP45m, Voice:
GBP20m and Carrier: GBP7m) and Off-net: GBP2m. Q1 FY20: Consumer
and Wholesale B2B2C (On-net): GBP317m, B2B (Corporate): GBP78m
(Data: GBP47m, Voice: GBP23m and Carrier: GBP8m) and Off-net:
GBP3m.
Further Q1 Highlights:
Continued focus on Fibre in Consumer and B2B
-- Lowest ever On-net churn at 0.68% (Q1 FY20: 1.29%).
-- Despite the challenges from COVID-19, we saw continued strong momentum
in Fibre net adds with 67k added to the base during Q1 (Q1 FY20: 118k),
with an improving trajectory in June and July compared to April and
May.
-- 84% of new Consumer customers took a Fibre product (Q1 FY20: 70%) with
59% of these taking the faster, higher ARPU 80Mbps product (Q1 FY20:
39%).
-- We saw similar encouraging trends in B2B, with 58% of new Partner customers
in our B2B division taking a Fibre product (Q1 FY20: 50%).
-- Our Full Fibre plans continue at pace with Openreach FTTP launching
in July, bringing likely price inflation.
-- CityFibre FTTP connections continue in York, and in Aberdeen, Bolton,
Milton Keynes, Newcastle and Peterborough later this year.
Stable network with ample headroom despite exponential growth
and new peaks
-- Our network has remained resilient in the face of continued data usage
increases (nearly 40% year on year), with ongoing reductions in cost
per Gb.
-- OTT video and online gaming traffic has increased 54% and 137% respectively
year on year.
-- New Ofcom data found TalkTalk average download speeds to be faster
over any given 24-hour period on both our 40Mbps and 80Mbps Fibre products
than equivalent products from industry equivalents (2) .
-- We saw our highest ever Fibre NPS scores and reducing complaints. We
remain focused on continuing to demonstrate improvement in this area.
Consistent performance in B2B, with strong pipeline and
meaningful base wins
-- Whilst impacted by COVID-19, the Ethernet base grew by 0.4k (Q1 FY20:
1.0k), as we continue to take more than our market share of new Openreach
Ethernet lines. 41% of new orders were for the higher ARPU 1Gb lines
(Q1 FY20: 33%).
-- Ethernet order volumes and installs in June have recovered from lower
levels in April and May, and now exceed the prior year. The outlook
remains strong, despite COVID-19, with stable growth versus FY20.
-- We have secured a number of meaningful contract wins with our partners
in the period. Including critical national infrastructure projects
for the NHS.
-- Our Direct business, serving SOHO and SME, is now trading ahead of
pre-COVID-19 levels and early performance of our Homeworker propositions,
including forward pipeline, is strong.
-- We have also signed a new five year contract with The Post Office for
provision of network and IT services. This is still subject to Government
approval which we expect in due course.
(2) According to data from Ofcom, the industry regulator,
comparing average download speeds over 24 hours (in November 2019)
for TalkTalk's Faster and Superfast Fibre versus equivalent
products from industry equivalents.
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END
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