TalkTalk’s (TALK) half-year results to September were somewhat overshadowed by two ancillary pieces of news. First, the group’s headquarters are moving from London to Salford – engendering a “more efficient operating model”. Second, and arguably more consequentially, it has created a new company – ‘FibreNation’ – with a view to rolling out full-fibre broadband across 100,000 homes over the next 12-18 months.
This marks quite a shift from the strategy outlined in February when TalkTalk revealed that it had agreed heads of terms with Infracapital – the infrastructure equity investment wing of M&G Prudential – to provide fibre to over 3m homes and businesses. We now know that this plan won’t progress any further. True, Infracapital – among other potential partners – remains in discussions with TalkTalk about developing FibreNation’s long-term capital structure. But the desertion of the original idea is disappointing, nonetheless.
Turning to the numbers: TalkTalk’s customers grew by 104,000, against just 46,000 a year earlier – reaching 4.2m. While revenues slipped slightly, this was largely due to the group’s exit from its mobile virtual network operator (MVNO) offering. Headline revenues grew 3.9 per cent to £771m, with cash profits up 35 per cent to £101m. And reported pre-tax losses narrowed, facilitated partly by improved cost savings.
According to Bloomberg consensus estimates, analysts expect adjusted EPS of 6p for the year to March 2019.
| TALKTALK (TALK) | ||||
| ORD PRICE: | 117.6p | MARKET VALUE: | £1.35bn | |
| TOUCH: | 117.1-118.1p | 12-MONTH HIGH: | 163p | LOW: 89p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | na | |
| NET ASSET VALUE: | 22p* | NET DEBT: | £760m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 827 | -95.0 | -9.2 | 2.5 |
| 2018 | 822 | -4.0 | -0.3 | 1.0 |
| % change | -1 | - | - | -60 |
| Ex-div: | 29 Nov | |||
| Payment: | 24 Dec | |||
| *Includes intangible assets of £737m, or 64p a share | ||||
