The business recovered strongly in Q4 as customer sentiment following the cyber attack in Q3 improved quickly:
- Our open and honest communications were recognised by customers as designed to help them protect themselves from potential fraud and the vast majority of customers believe we looked after them as a result
- Our decision to focus promotional investment on existing customers enabled us to retain customers at a higher rate than before the attack; and
- The unconditional free upgrade offer that we made available to all customers through December drove high levels of engagement with 489k customers choosing to take an upgrade.
These actions have driven higher customer engagement, with trust in the brand and brand consideration both higher than they were before the attack.
Churn improved significantly during the quarter and at 1.3%, was at its lowest level in our history. A key indicator of churn, unsolicited cease requests, fell to its lowest ever level towards the end of the quarter. As a result we held the on-net base flat in Q4 after a 101k decline in Q3, illustrating the speed with which customer sentiment towards TalkTalk has recovered, the success of our greater focus on existing customers and the benefits of the Making TalkTalk Simpler (“MTTS”) program.
Q4 also showed strong progress in Revenue Generating Units (“RGUs”) with growth of 148k and RGU/Customer up by 9.0% year on year to 1.70. Mobile and Fibre net adds were particularly strong: the mobile base grew by 90k with TalkTalk achieving the third highest share of the new SIM only market in the quarter (14.9%) including the successful launch of a mobile proposition in TalkTalk Business, and the fibre base grew by 72k. As we focused trading activity on growing mobile and fibre, the TV base declined by 14k. The growth in RGUs and the benefit of our autumn pricing activity, offset by promotional initiatives and mix, delivered on-net ARPU growth of 3.9%, which on a smaller customer base, resulted in on-net revenues stable year on year at £351m.
TalkTalk Business also ended the year strongly, with continuing strength in Data revenues (+40% and 2.3k new connections). This growth was offset by flat Carrier trading and the established decline in legacy Voice revenues (-30.2%). As a result, against a strong comparative (Q4 FY15: +14.3%), Corporate revenues as a whole fell by 2.9% year on year.
Off-net revenues, which comprise less than 3% of total group revenue (Q4FY15: 4.2%), fell by 25% year on year, reflecting the final impact of the disposal of our off-net base at the end of FY15. The combination of stable on-net revenues, a modest fall in Corporate revenue and the decline in off-net revenues drove a decline in total group revenue of 1.7% to £467m.