TalkTalk (TALK) remains one of the UK's fastest growing TV broadband service providers, and the sharp fall in headline profits at the half-way stage is no cause for alarm. That's because the drop reflected the fact that the group invested £86m into developing new products.
Indeed, TalkTalk added 167,000 customers in the second quarter alone to take the total to 557,000, boosted by an extended agreement with Sky to offer Sky movies and Sky sports at no extra charge. And with the launch of its Essentials TV service, the TV package is now accessible to all customers, and management believes that customer numbers will hit one million by the end of 2014. Customers are generating more income, too, as average revenue per user (ARPU) grew by 3.5 per cent in the six-month period. Simplifying the product range by reducing the number of tariffs and access methods is clearly working.
TalkTalk has also secured a number of strategic partnerships with specialists such as Logicalis, Callway One and Imex to help extend the reach of its data products, while data deployment to 100 Hutchison 3G stores will be extended to a further 247 stores in the second half.
Analysts at Barclays Equity Research are forecasting full-year pre-tax profits of £89m and EPS of 7.4p, down from £165m and 14p in 2013, but rising to £203m and 17.1p in fiscal 2015.
| TALKTALK (TALK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 275p | MARKET VALUE: | £2.6bn | |
| TOUCH: | 274-275p | 12-MONTH HIGH: | 278p | LOW: 186p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 64 | |
| NET ASSET VALUE: | 38p* | NET DEBT: | 133% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 828 | 46.0 | 4.3 | 3.45 |
| 2013 | 843 | -9.0 | -0.8 | 4.00 |
| % change | +2 | - | - | +16 |
Ex-div: 20 Nov Payment: 13 Dec *Includes intangible assets of £628m, or 67p a share | ||||
