Operational Highlights
• Customer base(1) growth of 192k (2017: 49k decline), with positive net adds in both Consumer and B2B, taking the closing base to 4,139k
• Q4 net adds(1) of 109k (Q4 2017: 22k) represents our highest ever quarterly net adds number and exceeded guidance due to particularly strong performance in Wholesale
• Lowest ever full year churn(1) of 1.22% (2017: 1.45%), with Q4 at 1.16% (Q4 2017: 1.40%)
• Over 2 million customers now on Fixed Low Price Plans (FLPP)
• Strong growth in TalkTalk Business (TTB) Ethernet base of 8.3k (2017: 7.7k) and continued Data revenue growth
• Our FTTP plans are progressing well; Chairman and CEO now appointed to the new Company
• TalkTalk has agreed Heads of Terms for the sale of its direct B2B business to The Daisy Group (Daisy) for £175m (see separate RNS)
Financial Highlights
• Total Headline revenue (ex-Carrier and Off-net)(2) +1% to £1,564m (2017: £1,555m); Q4 Headline revenue (ex-Carrier and Off-net)(2) +2%
• Statutory Revenue £1,708m (2017: £1,783m), 4% decline
• Headline EBITDA(2) in line with consensus(3) at £233m (2017: £361m)
• EBITDA movement driven significantly by investment in base growth and FLPP ARPU dilution
• Statutory operating loss £18m (2017: profit £95m); Statutory loss before taxation £73m (2017: profit £70m), after £119m of one-off costs associated with re-organising and simplifying the business
• Net debt/Headline EBITDA(4) 3.0x (2017: 2.2x).
• Final dividend 1.50p (2017: 5.00p), total FY18 dividend 4.00p (2017: 10.29p)
Looking forward
• Headline revenue growth
• Stabilising ARPU
• Base growth in line with previous guidance at more than 150k
• Continuing strong Ethernet base growth in TTB consistent with FY18
• Before adjusting for the impact of the Daisy transaction (c.£15m Headline EBITDA in FY19) we still expect to deliver 15% Headline EBITDA(2) growth in FY19, as per our previous guidance, as a result of a larger customer base, stabilising ARPU, material WLA savings and other significant cost reductions
• Non-Headline items, both P&L and cash, expected to be lower year on year
Tristia Harrison, Chief Executive of TalkTalk commented:
“When we reset TalkTalk a year ago, we said we would focus on delivering sustained customer growth whilst radically simplifying the business. One year into the strategy, we are making good progress on both. Our customer base grew by 192k in FY18, underpinned by our unique propositions and our lowest ever churn. We have also made real progress in simplifying the business to focus on core, fixed connectivity. This will continue into FY19 with the sale of our direct B2B business, as we focus on cementing our position as the market leader in our core B2B markets, Partner and Wholesale, which represent over 80% of our B2B business and continues to grow strongly.
As expected, our decision to invest in growth has come with short-term implications for EBITDA, but positions us well for FY19, where the benefits of a bigger base, regulatory tailwinds and ongoing cost reduction mean we remain on track for EBITDA improvement of 15% (before Daisy) and Headline revenue growth.
We have also set out our strategy to be at the heart of Britain’s full fibre future, in partnership with Infracapital. I am delighted to announce that Paul Reynolds will Chair the new company, with Charles Bligh having been appointed CEO, to oversee the roll out of a full fibre network to over 3 million homes and businesses, guaranteeing our long-term position as Britain’s leading value provider of fixed connectivity.”