Talktalk today reported a strong profit rise on the sale of its broadband business and customer growth, as Brits stayed indoors during the coronavirus pandemic.
Pre-tax profit hit £146m for the year, up from a £5m loss the year before, as cost cutting and the sale of its Fibrenation broadband arm for £206m in January helped boost business.
Talktalk said it made £127m profit on the sale of the firm, which installs the physical infrastructure needed for fibre broadband.
The British telecoms firm saw a 9.7 per cent rise in full-year core earnings to £260m for the year ended 31 March, after reporting a 34 per cent increase in its fibre customer base.
The firm added 605,000 new customers to its fibre base over the year, adding that the coronavirus pandemic had made “good quality, reliable connectivity become an absolute necessity”.
Chief executive Tristia Harrison added said the firm was now in a robust financial position, allowing it to maintain its dividend. But the firm held back from giving a formal guidance for the year ahead, citing “Covid-19 uncertainty”.
Why it’s interesting
Michael Hewson, chief market analyst at CMC Markets said the timing of the Fibrenation sale “could not have been better”, given the shutdown of the UK economy, adding that it gave Talk Talk “a decent buffer to its balance sheet for the uncertainty to come”.
Talktalk shares were down 2.7 per cent at 97p this morning despite the robust results, but stock has risen more than 40 per cent in the last three months.
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David Madden, market analyst at CMC Markets added: “No guidance was issued in light of the current environment, but the full year dividend of 2.5p was maintained — which sends out a positive message. Today’s set of figures should assist the Talktalk share price even though the wider sentiment is bearish.”
What Tristia Harrison said:
The firm’s chief executive said Talktalk’s “strong and resilient network has kept families, friends and communities connected nationwide and provided vital services for the NHS, care homes and supermarket distribution centres”.
Harrison said that customers have been upgrading their broadband packages during lockdown, as people work from home and turn to streaming services to stay entertained, Yahoo Finance reported.
Talktalk announced it has put aside a £15m provision to shelter it from the potential impact of the pandemic, suggesting many current customers may be unable to continue contracts when the government’s job retention scheme runs out.
“We are making sure that we plan cautiously as we get into the second part of the year as the various furlough schemes fall away,” said Harrison.