TalkTalk UK: FibreNation sorted but challenges remain

Report Overview

TalkTalk UK: FibreNation sorted but challenges remain

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TalkTalk UK: FibreNation sorted but challenges remain
TalkTalk’s subscriber base and revenue fell again in Q3, and ARPU continued to decline despite good growth in its higher ARPU (but even higher wholesale cost) high speed base
The sale of FibreNation to CityFibre and the accompanying wholesale deal provides much needed cash and de-risking, although the migration to full fibre still brings challenges to TalkTalk given its low price focus
TalkTalk’s shorter term operational outlook is also still very challenging, with growing EBITDA in 2020/21 particularly difficult given stable/declining ARPU and the rising wholesale costs of migrating to high speed broadband

Contents

Subscriber base still dropping, churn flat-ish

ARPU recovers, but revenue still declining

Pricing environment still tough, both existing and new

FibreNation resolved nicely, although full fibre will bring challenges

Outlook for growth also challenging

List of charts/tables

Figure 1: Incremental gross profit by product

Figure 2: TalkTalk on-net net adds (000)

Figure 3: TalkTalk monthly on-net churn

Figure 4: Consumer on-net operating performance

Figure 5: Group revenue growth

Figure 6: TalkTalk price increases

Figure 7: TalkTalk pricing in-contract vs out-of-contract (£/month)

Figure 8: Broadband entry-level pricing, new customers (£/month)

Figure 9: Broadband high speed pricing, new customers (£/month)

Figure 10: Incremental gross profit by product