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TalkTalk, the income play

The telecoms giant's share price has fallen too far since it suffered a cyber attack in October
TalkTalk, the income play

From Leicester City to Rocky Balboa, underdogs capture our imagination. TalkTalk Telecom (TALK) fits the bill. The 'quad-play' provider of television, broadband and both mobile and landline telephony has seen its valuation plunge since it fell victim to a cyber attack in October. True, initially TalkTalk looked to be in big trouble, but the damage was less than feared and investors overreacted. Now, as the group shows signs of recovery, its shares are lowly rated and come with a fat dividend yield.

IC TIP: Buy at 215p
Tip style
Income
Risk rating
High
Timescale
Long Term
Bull points
  • Fat dividend yield
  • Simplified business model
  • Customer 'churn' lowest ever
  • Prospects for 'business' section
Bear points
  • Competitive 'quad-play' market
  • First-half revenue set to fall

The seller of cut-price telecoms bundles has around 4m phone and broadband customers, including 740,000 users of high-speed fibre, as well as 750,000 mobile subscribers and about 1.37m television customers. It suffered a cyber attack in October that put the personal information of around 157,000 customers at risk. But management curbed subscriber losses through free upgrades, smart marketing and improved customer service.

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