Auditors have flagged a series of unusual accounting practices for broadband giant TalkTalk.
According to the firm’s annual report, which was obtained by The Telegraph, TalkTalk’s auditors Deloitte said in a reasonable worse case scenario the firm would only be able to meet the covenants on its debt by excluding more “exceptional items” from everyday costs.
Deloitte also said in the report that there was a “high level of estimation” in revenue recognition.
The firm is currently under pressure with £1.1bn in debt and fluctuations in customer churn.
According to the latest report, statutory loss before tax in the year to February grew to £28m from £11m. Net debt also increased by £120m.
Last month, TalkTalk said it had brokered a deal to acquire SSE Phone & Broadband from Ovo Energy; this move would add around 100,000 customers to the company’s portfolio.
The Salford-headquartered company, which is headed by Carphone Warehouse founder Sir Charles Dunstone, was taken private back in December 2020 after Toscafund Asset Management sealed a takeover deal.
Rumours were sparked earlier this year that Virgin Media O2 and Sky were eyeing up TalkTalk for their own potential takeover, which reportedly valued the company in the region of £3bn.
TalkTalk declined to comment on reports.