• Strong year-on-year growth in revenue (+3.3%), EBITDA1 (+44.7%) and Operating FCF (+120%)
  • Strong TV (+300,000), broadband (+25,000), fibre (+101,000) and mobile (+64,000) net adds
  • Significant reduction in year-on-year churn to 1.4%
  • Demand for broadband, fibre and mobile stronger than expected earlier in the year
  • Expect to invest incremental £20m-25m in SAC to capitalise on stronger volume opportunity
  • Expect to deliver at least 4% revenue growth in FY15 and further strong growth in EBITDA
  • On track to deliver FY17 financial targets of 4% CAGR in revenue and 25% EBITDA margin

H1 Financial Highlights

  • Total revenue up 3.3% to £871m (H1 FY14: £843m)
  • On-net revenue up 5.9% to £648m (H1 FY14: £612m); Corporate revenue up 9.3%
  • Headline EBITDA1 up 44.7% to £110m (H1 FY14: £76m)
  • Operating Free Cashflow up 120% to £44m (H1 FY14: £20m)
  • Net debt/EBITDA reduced to 2.25x from peak of 2.33x at end of FY14
  • Headline1 EPS up 263% to 2.9p (H1 FY14: 0.8p)
  • Interim Dividend up 15% to 4.6p (H1 FY14: 4.0p)

1 Excluding exceptional items and amortisation of acquisition intangibles

Q2 Operating Highlights

  • Q2 revenue up 3.6% to £437m (Q2 FY14: £422m); acceleration from Q1 (+3.1%)
  • Corporate revenue up 8.5% including 55% growth in Data revenues
  • Q2 on-net ARPU up 1.8% to £26.54 (Q2 FY14: £26.08); acceleration from Q1 (+0.3%)
  • On-net churn stable quarter-on-quarter and reduced year-on-year to 1.4% (Q2 FY14: 1.7%)
  • Broadband net adds +15,000, TV +115,000, Fibre +67,000, Mobile +40,000

Dido Harding, Chief Executive of TalkTalk commented:

“We have made strong financial and operational progress in the first-half of the year with accelerating revenue growth, profits up 45% and operating cash flow up 120%.

We are ideally placed as the market moves to quad-play bundling of fixed phone and broadband, TV and mobile. A third of our customers now take phone, broadband and TV from us, 9% take mobile and we recently announced that mobile will now come as standard for all Plus TV customers. This, coupled with our work to continually improve our customers’ experience, has again helped us to reduce churn, which fell to 1.4% from 1.7% a year ago.

We expect to deliver revenue growth of at least 4% and strong growth in EBITDA for the full year. In the second quarter we delivered our strongest organic broadband, mobile and fibre net additions in four years as well as adding more TV customers than the rest of the market put together. We expect this growth to accelerate in the second half which means we will invest more in customer acquisition costs than we anticipated at the beginning of the year. This investment will provide us with a larger customer base to leverage over the medium term, further reinforcing our confidence in achieving our FY17 financial targets.”