Q1 update
We have made a good start to FY16. We are on track to deliver full year revenue growth of 5% and strong growth in EBITDA and Free Cashflow as we make progress towards our FY17 targets.
Revenues during the quarter grew by 3.5% year-on-year with strong growth in on-net (+6.5%) and corporate (+4.9%) offsetting the continuing decline in off-net revenues (-47%). Revenue generating units (RGUs) per customer on our on-net base grew by 15% to 1.6 compared to 1.4 a year ago, and demand for Ethernet connections in TalkTalk Business has remained firm.
The launch of our unlimited SIM at the beginning of the quarter has delivered strong growth in mobile with a 15% share of the new SIM only market in the quarter compared to 11% in Q4 FY15. In contrast, the broadband market was softer than we have seen in recent quarters, with higher promotional activity in the sector. Against this background, the migration of Tesco broadband customers onto our network has begun well and we expect to complete the process over the remainder of FY16.
At the end of June we announced details of our Fibre to the Premise proposition in York. The service, called Ultra Fibre Optic, will come as standard with TalkTalk's three consumer packages, SimplyBroadband, Essentials TV and Plus TV, as well as TalkTalk's Complete Business Broadband package for small to medium sized firms. The first customers are expected to be connected this autumn and homes and businesses currently with TalkTalk will be able to receive a priority upgrade to Ultra Fibre Optic.
We have made good progress across many of our MTTS (Making TalkTalk Simpler) programmes during the quarter and are on track to deliver substantial savings during the second half of the financial year. As part of our ongoing review of legacy tariffs and bases we have begun a review of the profitability of different groups of customers on our on-net base to identify any benefits that might be available from further simplification of the base. In addition, we have announced the consolidation of our sites in the North West to a single site at Manchester's Soapworks development, which will allow us to reduce property costs from FY17 onwards.
Churn was stable year-on-year during the quarter.
H1 Results
We expect to announce H1 results on 10th November 2015. As we indicated at the time of our preliminary results in May, FY16 EBITDA is expected to be H2 weighted with revenue growth accelerating through the year against H1 weighted operating costs. This weighting is expected to be more pronounced than in previous years, driven primarily by the timing of operating costs and savings from MTTS.