Talk Talk share price rises after jump in financial forecasts

 
Billy Ehrenberg
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Talk Talk chief Dido Harding (Source: Getty)

TalkTalk has told investors they can expect a bumper year in 2017, after it raised its financial outlook expectations. Its share price rose around 2.5 per cent in early trading.

The figures

Talk Talk’s revenue for the full year to 31 March was up 4.2 per cent to £1.8bn, but there was no real move in profit before tax, which grew by £1m (3.2 per cent) to £32m. Fourth-quarter revenue was particularly strong, hitting six per cent.

The company said it expected to be able to cut £70m from its costs by 2017, £20m more than it originally estimated.

Revenues for 2016 are expected to grow five per cent, “driven by continuing growth in customer numbers... and growth in TalkTalk Business revenues”.

Churn (the percentage of customers leaving after their subscription ends), Talk Talk said, was at its lowest ever rate – just 1.3 per cent.

Why it's interesting

Talk Talk has invested big money in expanding its customer base, buying Blinkbox from Tesco and acquiring the grocer’s broadband service. This expenditure came alongside a backdrop of cost-cutting. It released a warning in February, as planned cost-cutting was disrupted by continued spending on its customer base.

Talk Talk is also considered to be in the frame to buy Tesco Mobile, although it may have strong competition from O2.

What Talk Talk said

Chief executive Dido Harding said:

We have delivered on our revenue growth guidance as planned, and have exited the year with our strongest ever quarterly revenue growth of six per cent, and our lowest ever level of churn. British consumers and businesses increasingly appreciate TalkTalk's value for money products, and we are focused on improving our customers' experience still further.

In short

Talk Talk is investing big sums on improving its customer base, and if it can cut costs in line with its expectations, could well become an even bigger player in the communications industry.

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