July 17, 2018 / 10:15 AM / 10 months ago

TalkTalk low-price plans help it add 80,000 customers, shares jump

LONDON (Reuters) - Britain’s TalkTalk (TALK.L) added 80,000 net broadband customers in its first quarter, helped by demand for its fixed low price plans whose total subscribers grew in spite of the first wave coming to the end of their contracts.

FILE PHOTO: A woman carries her phone as she passes a branded logo outside the Talktalk headquarters in London, Britain May 10, 2017. REUTERS/Neil Hall/File Photo

Chief Executive Tristia Harrison said TalkTalk had now recorded six consecutive quarters of growth in its customer base since it shifted strategy to return to its roots as a value broadband provider.

Shares in TalkTalk, which have fallen 39 percent in the last 12 months, were trading up 7 percent at 115 pence at 1000 GMT.

The growth came from wholesale rather than retail customers, Harrison said, but the company was seeing good momentum in its fixed price plans, which it introduced guaranteeing customers will not see a rise in bills for the duration of the contract.

The plans grew to 2.1 million subscribers and Harrison said the first group of customers who moved to the plans in late 2016 had not defected when their contracts ended.

“This quarter we saw a very large number coming out of contract, around half a million, and you might have expected churn to pick up, it didn’t, it remained stable,” she said.

They were renewing at slightly higher prices on average, resulting in ARPU (average revenue per user) growth of 2-3 percent for those customers, she said.

That trend would help ARPU stabilise by the end of the year, she added.

The mix of wholesale and retail adds in the quarter and customers moving to the low price plans for the first time resulted in ARPU falling to 24.65 pounds in the quarter from 25.10 pounds a year ago.

TalkTalk, which had 4.22 million customers at the end of June, reported headline revenue of 382 million pounds, up 4.1 percent year-on-year, for the quarter to end-June.

It maintained its target to grow its broadband base by at least 150,000 by the end of its financial year and increase headline core earnings by 15 percent.

TalkTalk scrapped the sale of its direct business-to-business unit to Daisy Group last month, a transaction that would have raised 175 million pounds. Harrison said the company was not in any rush to find another buyer.

“If somebody comes to us and it’s the right price, and the right thing for our customers and for our people, we will consider it but we are in no rush,” she said.

Reporting by Paul Sandle, editing by James Davey and Emelia Sithole-Matarise

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