TalkTalk on Thursday published a strong set of full-year financials on the back of increased take-up of quad-play services, prompting it to up its medium-term revenue growth forecast.
But while the U.K. operator talked up its plans for growth across its broadband, TV and mobile businesses, it made it clear that an acquisition of U.K. MVNO Tesco Mobile is not on the cards.
"We’ve added a million revenue-generating units," over 12 months, an increase of 20% year-on-year, TalkTalk CEO Dido Harding said on the telco’s full-year 2015 results call.
TV net additions accounted for 497,000 of the total, down by almost 200,000 compared with the previous year. The telco added 180,000 mobile customers, up 65%, while fibre net adds more than doubled to 272,000. On the broadband sides, net adds were lower year-on-year, but still came in at 87,000.
"Four years ago we didn’t sell mobile, fibre or TV and we had a declining broadband base," Harding said.
She made repeated reference to the promise of the quad-play market for TalkTalk, which aims to establish itself as the value-for-money provider and shake off its "tarnished service reputation".
TalkTalk sees the U.K. fibre and mobile markets as particular opportunities for growth.
With regard to the former, Harding noted that TalkTalk’s fibre-to-the-premises (FTTP) project with Sky and CityFibre in York is progressing well.
"The system build is on track and due to go live in the autumn, and we’ll be launching the ultrafast brand very soo n," she said.
And on the mobile side, the company has brokered a new MVNO deal with O2 that provides better economics than its previous agreement with Vodafone and includes 4G access. It aims to build on that by rolling out its own mobile core and deploying femtocells for better indoor coverage.
However, Harding was clear that expansion in mobile will not involve the acquisition of Tesco Mobile, the O2-backed MVNO that Tesco reportedly plans to sell.
"We are not interested in buying the Tesco Mobile base," Harding said.
"Why would you buy an MVNO when you believe you can undercut the market and have superior economics by growing organically?" she asked.
TalkTalk was named as a likely buyer because it acquired Tesco’s broadband customer base and Blinkbox video streaming service in January.
That and other acquisitions, including its purchase of Virgin Media’s off-net broadband customer base in November, "will drive future growth," Harding said.
And the company is optimistic about its prospects.
"We are upgrading our revenue guidance to full-year ’17 to 5% CAGR," from an earlier 4% target, Harding said.
In the financial year to the end of March, TalkTalk posted 4.2% revenue growth to £1.8 billion, after a VAT adjustment, with an acceleration in Q4 when turnover increased by 6% year-on-year.
EBITDA grew by 15% to £245 million, giving a margin of 13.6%.
Harding said she is confident TalkTalk will deliver on its 25% EBITDA margin target for full year 2017.
