TalkTalk has opened up on a challenging fiscal 2020 which saw revenues decline by 3.9 per cent to £1.518bn, paired with a slight contraction of its broadband business.
The latest numbers come from a preliminary earnings report for the financial year ended March 31, 2020, during which the UK ISP shed 69,000 fixed line broadband connections, retaining 4.22 million.
TalkTalk attributed the churn to customers on its lower-cost plans, who typically use copper-based products, which are gradually being phased out as the UK's fixed-line telecommunications infrastructure increasingly shifts to fibre. The business said it had taken a "customer lifetime value" approach, hinting it wasn't too sad to see the back of its "low-value legacy copper customers".
Other figures on TalkTalk's report card point towards strong fibre performance, with the ISP's broadband base increasing by 34 per cent (or 605k) to 2.37 million. It also noted that 78 per cent of new consumer connections, and 58 per cent of B2B connections, opted for faster fibre lines.
Still, this good news is tempered by lower ARPU (average revenue per user) figures, which TalkTalk partially attributed to lower voice usage.
This likely won't be a one-off, given the increasing popularity of OTT voice apps among the wider population — such as Skype, WhatsApp, and Facebook Messenger — as well as within enterprises. TalkTalk also points to losses caused by re-contracting of legacy copper customers, which often results in these holdouts moving to cheaper plans.
Statutory operating profit came in at £197m, versus £47m a year earlier. TalkTalk said this "reflects the profit on disposal of the group's Fibre Assets Business" for £206m to City Fibre in early March.
The business impact of the COVID-19 pandemic has been something of a mixed bag for the ISP, with TalkTalk winning contracts to wire up the NHS Nightingale Hospitals*, care homes, and the supermarket distribution centres. It has also managed to reduce staffing at its contact centres — adding that it "will not be returning to pre-COVID-19 contact centre agent levels, further supporting our cost reductions".
The impact may have been greater had the pandemic reared its ugly head before the final quarter of the financial year.
And while TalkTalk has struggled to add new lines, lockdown fears have meant that existing customers are reticent to move networks, lest they suddenly find themselves without an internet connection.
However, TalkTalk expressed concerns that the 2021 financial year could be trickier, as furlough schemes are phased out. It has estimated an impact of £15m from bad debt from customers unable to pay and other factors in the coming fiscal year, adding that "given the COVID-19 uncertainty, we do not feel it is appropriate to give formal guidance". ®
* Picture it: You have coronavirus; you're stuck in the ExCel conference centre in the Docklands area of London. At least you have internet (via TalkTalk).