Three years ago, TalkTalk (TALK) resembled a "snake who had eaten the goat", says chief executive Dido Harding. Now, with the business streamlined, costs slashed and customer service dramatically improved, the company has just had a "momentous" year. Its TV business is going great guns, too, and concerns about BT's new sports offering look overdone.
TalkTalk finally returned to year-on-year growth in the fourth quarter, helped partly by price increases, as average revenue per user grew, new products were introduced and the broadband customer base expanded. And the company expects revenue to increase by "at least" 2 per cent this year. Crucially, 150,000 TV customers were added over the three months, far more than expected. That takes the total since the YouView service was launched last September to 230,000, and it's currently signing up 12,000 a week. Another £25m of costs have been cut, too, and more savings are likely. Strip out a £62m investment in TV and underlying cash profit rose 11 per cent to £352m - 2 per cent ahead of consensus estimates.
Elsewhere, corporate revenue edged up 1.9 per cent to £322m, as strong growth from high-margin data and carrier services more than offset a 5 per cent decline in lower-margin legacy business.
Credit Suisse expects adjusted pre-tax profit of £149m in 2014, giving adjusted EPS of 13.5p (from £165m and 14.9p in 2013).
| TALKTALK (TALK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 244p | MARKET VALUE: | £2.27bn | |
| TOUCH: | 243-244p | 12-MONTH HIGH: | 278p | LOW: 129p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 47p* | NET DEBT: | 89% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.39 | 115 | na | nil |
| 2010 | 1.69 | 11.0 | -0.30 | 4.65 |
| 2011 | 1.77 | 57.0 | 3.90 | 5.60 |
| 2012 | 1.69 | 127 | 15.6 | 9.00 |
| 2013 | 1.67 | 122 | 11.3 | 10.4 |
| % change | -1 | -4 | -28 | +16 |
Ex-div: 3 Jul Payment: 2 Aug *Includes intangible assets of £633m, or 68p a share | ||||
