Broadband and calls supplier TalkTalk (TALK) saw revenue fall 7.5% in the first quarter as the Covid-19 crisis made switching on new customers difficult and saw live sporting events axed.
But the company has stuck to its full-year guidance for ‘stable to growing’ adjusted earnings, having seen some recovery in demand in June and July. Trading had recovered in June and July, with a significant improvement in average revenue per user.
Headline revenue, excluding carrier and off-net sales, in the three months to 30 June dropped to £358 million, from £387 million a year ago.
CALM IN THE CRISIS
The robust nature of the business during a very difficult period was highlighted by analysts, particularly on the Consumer side.
‘Here the story is one of resilience, with customers continuing to maintain services and pay their bills and while the lack of live sports impacted ARPUs (average revenue per user), OTT (over the top) video, such as Netflix and the new Disney+ service, and online gaming traffic increased 54% and 137% year on year, highlighting the value of decent broadband,’ said Megabuyte analyst Philip Carse.
TalkTalk has set aside £15 million to cover the cost of Covid-19 impacts this year, a figure the company claims is ‘conservative’, based on current bad debt trends in both its consumer and business-to-business markets.
OPTIMISM PEAKS OVER PARAPET
‘We see a positive outlook to the first half and are confident in our full year plan to deliver stable to growing headline earnings before interest, tax, depreciation and amortisation with strong cash conversion,’ said chief executive Tristia Harrison, highlighting the rapid rise of internet use into everyday life.
‘TalkTalk would appear to be more positive than in June, with the expansion of the EBITDA outlook from stable to stable to growing,’ said Philip Carse.
But investors appear to need more convincing, with TalkTalk shares drifting around 1.3% lower to 78.45p, close to their Covid-19 lows.
