TalkTalk Telecom Group PLC

Results for the half year to 30 September 2019 (H1 FY20)

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Strong growth in Headline EBITDA and Fibre net adds; outlook remains unchanged

Metric

H1 FY20
IFRS 16¹

H1 FY20
Pre-IFRS 16¹

H1 FY19
Pre-IFRS 16 ¹

Headline² revenue (ex-Carrier and Off-net)

£764m

£764m

£771m

Statutory revenue

£792m

£792m

£822m

Headline² EBITDA

£140m

£115m

£101m

Statutory operating profit

£29m

£28m

£19m

Statutory profit before taxation

£1m

£4m

(£4m)

Net Debt³

£1,041m

£830m

£760m

Fibre Net Adds

292k

292k

192k

On-net ARPU

£24.49

£24.49

£25.01

On-net churn

1.27%

1.27%

1.20%



Tristia Harrison, Chief Executive of TalkTalk, commented:

“We’re pleased that our clear strategy to accelerate customer growth in Fibre broadband while also reducing costs has led to a significant increase in profitability in the first half, with a 14% year-on-year increase in like-for-like (4) EBITDA. We now have over two million customers taking a Fibre product, adding nearly 300,000 customers in the half.

Fibre broadband is good news for customers and TalkTalk. It offers a faster, more reliable service whilst also reducing churn and comes with a materially lower cost to serve. In addition, our soon to be completed HQ move and shift to a self-service model is underpinning our cost reductions. 

Our Headline EBITDA outlook for the year remains unchanged.”

Highlights

  • Fibre net adds up 52% to 292k, including a record 174k in Q2 (Q2 FY19: 125k), accounting for 33% share of all new Openreach Fibre to the Cabinet (FTTC) lines in Q2 (H1 FY19: 22%)
     
  • Headline revenue (ex-Carrier and Off-net) and On-net ARPU down 0.9% and 2.1% respectively, largely due to lower Voice usage and call boost revenue across Consumer and B2B. We also accelerated the re-contracting of our remaining higher ARPU legacy Copper customers onto a Fixed Low Price Plan (FLPP), ahead of regulatory and industry commitments on out of contract pricing, increasing our in-contract base to 72% (Q4 FY19: 68%). Headline revenue decrease was offset in part by increased Fibre penetration
     
  • Statutory revenue contracted by 3.6% mainly due to exiting MVNO operations and declining Carrier revenue
     
  • Headline EBITDA (pre-IFRS 16) represents 13.9% growth with increased Fibre penetration and HQ move efficiencies driving a materially lower cost base
     
  • Statutory operating profit improvement reflects the Headline EBITDA growth
     
  • Headline EBITDA outlook for the year (pre-IFRS 16) remains unchanged
     
  • Increase in net debt (pre-IFRS 16) driven by working capital outflows due to a change in distribution model and accelerated Fibre growth, the cash cost of our HQ move and continued investment in FibreNation

FibreNation

  • Ongoing advanced negotiations with interested parties regarding its FibreNation business
     

¹ IFRS 16 has been applied using the modified retrospective approach. Accordingly, the comparative information has not been restated, with FY20 results presented both including and excluding IFRS 16 to allow users to see how the results have moved period on period. This alternative performance measure (APM) will be presented for one year only until the comparatives also include the adoption of IFRS 16. See note 2 for more information.

² See note 2 for an explanation of APMs and non-Headline items. See note 7 for a reconciliation of Statutory information to Headline information.

³ Total net debt includes £211m lease liability, following adoption of IFRS 16 (see note 2), of which £36m relates to finance leases (H1 FY19: £40m finance leases).

4 Like-for-like EBITDA is referring to Headline EBITDA on a pre-IFRS 16 basis

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

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