Trading update for the 6 months to 30 September 2018 (H1 FY19)

Continued growth in Broadband base and Headline revenue; reiterating full year expectations

Operational Highlights

  • Customer base growth of +104k (H1 FY18: +46k), taking the closing base to 4,243k 1
  • Q2 net adds of +24k (Q2 FY18: +26k), with growth in both Consumer and B2B
  • Ongoing low level of churn at 1.2% (H1 FY18: 1.3%), with Q2 the lowest ever quarter at 1.1%
  • Accelerating Fibre uptake with 192k net adds in the half and a record 125k in Q2
  • Improving ARPU trends, with encouraging quarter on quarter Consumer ARPU growth
  • Continued strong growth in B2B including data connections (Ethernet and EFM) of +4.3k (H1 FY18: +3.8k)
  • TalkTalk’s HQ moving to Salford; creating one main campus and a more efficient operating model 
  • Accelerating full fibre plans, to reach over 100,000 homes in the next 12-18 months. Launched new company, FibreNation to deliver our ambition (see separate RNS)

Financial Highlights

  • Total Headline 2 revenue (ex-Carrier & Off-net) up 3.9% to £771m (H1 FY18: £742m 3); Q2 Headline revenue (ex-Carrier & Off-net) +3.7%    
  • Statutory revenue declined 0.6% to £822m (H1 FY18: £827m 3), primarily due to exiting MVNO proposition
  • Headline EBITDA £101m (H1 FY18: £75m 3)
  • Statutory operating profit £19m (H1 FY18: £62m loss 3); Statutory loss before taxation £4m (H1 FY18: £95m loss 3)
  • Headline net debt 2 £760m – excluding finance leases of £40m (H1 FY18: £837m – excluding finance leases of £18m)
  • H1 dividend in line with existing policy at 1.00p (H1 FY18: 2.50p)

FY19 Outlook

  • Headline EBITDA in line with expectations
  • Headline revenue growth, with stabilising Group ARPU and ongoing Consumer ARPU growth
  • In excess of 150k broadband net adds for the full year
  • Non-Headline items, both P&L and cash, to be lower year on year

Tristia Harrison, Chief Executive of TalkTalk, commented: “This has been a strong first half for TalkTalk, with continued broadband base growth and further progress as we become a simpler, more efficient business. Our Fairer Broadband commitment, focus on reliability and unique Fixed Low Price Plans continue to improve customer satisfaction and loyalty, resulting in our lowest ever churn in the second quarter. We remain on track to deliver our plan for the year, with growing Consumer ARPU and increasing revenue leading to strong EBITDA growth.

"With core business performance on track, we are today announcing two additional steps to position TalkTalk for the future. We are accelerating our full fibre strategy, launching a new company, FibreNation, which will expand our Gigabit broadband footprint to over 100,000 homes in the next 12-18 months. As we continue to radically simplify TalkTalk, we will also create a single main campus for the business in Salford. Having a single main home will reduce operational complexity and allow us to become a more efficient, focussed business, in turn supporting our long-term growth.”

1 All customer KPIs relate to the On-net base. The closing Off-net base amounted to 33k at the end of Q2 FY19 (Q2 FY18: 55k), representing less than 1% of the total broadband base.

2 See note 7 for a reconciliation of headline information to statutory information.

3 See note 2 for further details on the restatement of comparative information due to the introduction of IFRS 15 and IFRS 9.

The person responsible for arranging the release of this Announcement on behalf of the Company is Tim Morris, Group General Counsel and Company Secretary.

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