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Talk Talk Fundamentals (TALK)

Credit Suisse Outperform 275.50 275.00 275.00 Reiterates

Stop to 275.0 to lock in +10

By James Quinn

8:30PM GMT 16 Nov 2013

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Dido Harding isn’t taking the threat from BT lightly. Just a week after her telecoms rival snatched Champions League rights from BSkyB, the TalkTalk Telecom Group chief executive admits she is closely monitoring its progress. But she isn’t overly concerned, either.


“We are counting down the days,” she grins when asked if the company she has led since just before its initial public offering in March 2010 has any real rivals in the digital television space.


“There’s a small sweepstake in the office to the day on which we have more customers than BT. It’s not very far away. They were at about 900,000, and then they added 70,000 in the last quarter, but we added 167,000, so we’re catching up fast and expect to add more.”


Despite not having flashy football rights, the FTSE 250 broadband, phone and television company has now amassed slightly more than 500,000 TV customers with its digital offering, and hopes to have 1m by the year-end.


In TV, she points out, TalkTalk added more customers than BSkyB, BT and Virgin put together in the last quarter. The hype surrounding BT Sport has helped. “Because of all the noise around football, lots of people noticed that you’ve got all these TV platforms, and so for our TV business that was a really good thing.”



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TalkTalk launched its YouView-based TV and video on-demand service in the summer of 2012. Rather than charging extra, customers who take its £7.50-a-month broadband and phone package are given a box allowing them to watch 70 digital channels.

Unlike Freeview, however, it also offers the ability to “catch up” programmes from the past seven days, stream on-demand services such as BBC iPlayer or 4OD through a television, as well as buy individual films or subscribe to a specific channel – such as Sky Sports – for a month or more.

To date, 25pc of customers have paid for either a channel, a film or a bundle of channels.

Explaining why the service is increasingly popular, Harding references her own home life. Married to John Penrose MP, a Conservative whip, she finds it hard to watch The X Factor, which TalkTalk has sponsored since before its split from Carphone Warehouse.

“He won’t let me watch it, and so I have to watch it on 'catch-up’ as he works late on a Monday,” she says. “I read that 70pc of all TV viewing minutes are viewed by women, and it rings true.

Women watch a lot less football. If you could pick any programme on free-to-air TV to run ads on, it would be Strictly, The Great British Bake-Off or The X Factor, it wouldn’t be a football match.

“Any family will tell you that’s the key content, and that’s what you see with our customers. Whereas our competitors are busy slugging it out at the premium end. You have to keep remembering there’s a huge expanse of the country that isn’t interested in football.”

Although Harding, the 46-year-old granddaughter of Second World War hero Field Marshal Sir John Harding, may be tongue in cheek at times about her competitors, the launch of BT Sport has not been without its problems. Despite the fact that TalkTalk’s offering is pitched at a different type of customer, it did hurt it initially.

“We did see the broadband churn – the amount of customers leaving – spike literally around the first few weeks of the football season,” she admits, putting it down to an initial misunderstanding of pricing.

“We saw churn spike in those weeks – we’ve seen it come down since then, we’re not that worried,” she continues.

The challenge for Harding is to now leverage the customers it does have into spending more through its TV service. “We’re looking forward as a business to our first proper Christmas. I know that sounds strange, but I’m a retailer,” she says, reflecting on her decade-plus at Tesco and later J Sainsbury.

“For the first time, we’ve now got over half a million customers who’ve got our TV service, which we think can give them a wonderful Christmas. So we’re starting to get into our heads what are the blockbuster movies we’re hoping to remind our customers of on Christmas Eve.”

Her aim, as with all TalkTalk’s products, is to offer value-for-money distribution products. Across the business, TalkTalk has 4m customers, but the ultimate goal is to get each to sign up to each one of its four products – fixed-line phone, broadband, mobile and TV – known as “quad play” in the industry.

Its fledgling mobile phone offering began selling Sim cards 19 months ago and basic handsets just over a year ago, and now has in the region of 250,000 customers.

It is aimed at basic customers – such as 11-year-olds starting secondary school – but is proving to be successful in marketing terms.

“If customers take mobile as well as broadband and phone, they’re much more likely to recommend it to their friends, and that’s making us more confident that there is a quad play market there,” she said.

Such recommendations are crucial for TalkTalk, which Harding says spends £20m on advertising a year, against the £20m BT and BSkyB each spent in August alone.

“We spend our 'advertising’ money on actually being the right price for customers. As a value-for-money business, it’s better to spend money to give it to customers, rather than spend it on lots of TV ads.”

Keeping customers onside is key to TalkTalk, given its reputation for complaints with regulator Ofcom, which spiked in 2011 when the business was fined £3m for incorrectly billing tens of thousands of customers for services not received.

TalkTalk has often been highlighted by Ofcom during the past four years, when every three months the regulator publishes its complaints data.

“I’d be lying to say that hasn’t changed our behaviour – in the early days we were being properly shamed, and we did something about it and we know we’re not good enough yet, and we’re getting better each quarter,” Harding says.

As well as customer satisfaction, the other way she hopes to add to revenues – £843m in the first half of the year to September 30, delivering pre-tax profit of £7m – is through innovation.

“We expect next year to allow customers who can’t get a Freeview signal to get YouView by delivering all of the live free-to-air channels down a broadband connection,” she says, adding that in five years set-top boxes should be redundant, with saved content stored in the cloud.

Similarly, to woo fixed-line customers, TalkTalk has received permission to use an old slither of wireless spectrum, bought some time ago for a six-figure sum, to provide in-home 4G calls.

All the innovations are focused on adding customers: “We don’t have a dramatic ambition to grow our total customer base. Our opportunity is to give existing customers more, and as the numbers of customers coming online grows, that’s how we’ll add numbers.”














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Wee punt long on spreads in @ 271.9 target 290.0 tight stop.

Stopped out at the open, back on watch list.

Interim Management Statement

Interim Management Statement - Third Quarter FY 2013/14

· Strong acceleration in year-on-year revenue growth to +5.1%
· 110,000 net adds including 103,000 Post Office customers
· 175,000 TV customers added in quarter, taking base to 732,000
· On-net churn reduced as expected, from Q2 peak to 1.6% (Q2 FY14: 1.7%)
· Reiterating FY14 guidance and confident of achieving medium term financial targets

Financial Highlights
· Total revenue up 5.1% to £436m (Q3 FY13: £415m)
· On-net revenue up by 9.6% year-on-year to £320m (Q3 FY13: £292m)
· Corporate revenue up by 8.8% to £87m (Q3 FY13: £80m)
· On-net ARPU up by 5.2% year-on-year to £26.79 (Q3 FY13: £25.47)

Operating Highlights
· 107,000 on-net net adds (Q2 FY14: +34,000), including 84,000 Post Office customers
· 197,000 TVOD pay per view movies taken by TV customers (Q2: 123,000)
· 24,000 new mobile customers added, taking base to 260,000
· 35,000 new fibre customers added, taking base to 177,000
· 49% growth year-on-year in data products revenues in TalkTalk Business

Dido Harding, Chief Executive of TalkTalk commented:
We are delighted with the material step up in our revenue growth during the quarter, which shows the powerful effect of combining a modestly growing customer base, disciplined pricing and promotional activity, and strong new product growth particularly in TV. In TalkTalk Business, we saw a strong acceleration in data products growth and successfully migrated Post Office customers onto our network. As a result this has been another quarter of successfully delivering against our objectives; we are confident that we are building a business with strong and sustainable revenue momentum and growing profitability. We are on track to deliver our FY14 guidance and our medium term targets of 4% revenue CAGR (FY14-17) and 25% EBITDA margin by FY17.

There will be a conference call for analysts and investors starting at 8.00am

Credit Suisse Outperform 311.30 310.30 300.00 300.00 Reiterates

Chart doesn't look very inspiring. Full year preliminary results Thursday.

Left an optimistic limit buy on spreads @ 292.0

Nice spike, chart improving?

Preliminary Results

Preliminary results for the 12 months to 31 March 2014 (FY14)

· Over 1m TV customers at 12 May 2014; fastest growing TV business in the UK
· One of the fastest growing B2B telecom operators in the UK; FY Corporate revenues +5.6%
· 6th consecutive quarter of net adds growth (+10,000) delivers on-net base of over 4m
· 5th consecutive quarter of y-o-y revenue growth (+4.9%) delivers full year growth of 3.4%
· H2 EBITDA margin up 650bps to 15.5% (H1 9.0%); FY margin 12.3% (FY13: 17.4%)
· Dividend per share 12.0p (+15.4%) in line with commitment
· On track to deliver 4% CAGR in revenue and 25% EBITDA margin by FY17
FY14 Financial Highlights
· Total revenue up 3.4% to £1,727m (FY13: £1,670m); H2 +5.0% vs H1 +1.8%
· Corporate revenue up 5.6% to £340m (FY13: £322m): H2 +9.9% vs H1 +1.3%
· Headline EBITDA £213m (FY13: £290m) after £112m of incremental investment in growth
· Headline Earnings Per Share 6.8p (FY13: 14.9p); Statutory Earnings per Share 3.1p (FY13: 11.3p)
· Dividend Per Share 12.0p (FY13: 10.4p)
Q4 Operating Highlights
· Total revenue up 4.9% year-on-year to £448m (Q3 FY14: £436m)
· On-net revenue up 7.2% year-on-year to £327m (Q3 FY14: £320m)
· On-Net ARPU up 2.1% year-on-year to £26.93 (Q3 FY14: £26.79)
· Corporate revenue up 11.0% year-on-year to £91m (Q3 FY14: £87m)
· On-net net adds 25,000 (Q3 FY14: +107,000 including 84,000 Post Office customers)
· Accelerating TV growth; 185,000 TV customers added, taking FY14 closing base to 917,000
· On-net churn reduced to 1.5% (Q3 FY14: 1.6%)

Dido Harding, Chief Executive of TalkTalk commented:
I am delighted to report our first full year of revenue growth since demerger demonstrating that our strategy for growth is delivering. We have built a TV business with over one million customers in just 18 months - a quarter of our total customer base. We continue to grow faster than all the other UK TV operators put together and are confident that in time, all our customers will take TV. Our focus on data products for businesses is also delivering very strong growth and as a result, TalkTalk Business is one of the fastest growing B2B telecom operators in the UK.
Following investment in the first half, we delivered a sharp rebound in profitability in the second half combined with accelerating revenue growth. We are on track to deliver our financial targets by FY17, and are increasingly excited about the longer term growth opportunities beyond. As a result we are committing to another year of growing the dividend by no less than 15% in FY15.

Stop to entry for risk free trade.

Espirito Santo Execution Noble Buy 292.20 - 395.00 Reiterates

LATEST BROKER VIEWS

Date Broker New target Recomm.
16 May Barclays... 350.00 Overweight
15 May Credit Suisse 300.00 Outperform
15 May Espirito... 395.00 Buy
6 May Berenberg 220.00 Hold
2 May Berenberg 220.00 Hold
30 Apr Jefferies... 260.00 Hold
22 Apr Berenberg 220.00 Sell
22 Apr Nomura 330.00 Buy
17 Apr JP Morgan... 360.00 Overweight
16 Apr Barclays... 350.00 Overweight
Broker Recommendations for TalkTalk Telecom Group
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Creeping up nicely dc, moved my stop to 302.0 to lock in + 10

Had a go this morning to crack resistance @ 325.0

Moved stop to 316.0 to lock in + 24

Stop to 320.0 to lock in + 28

Breakout on the cards.

Will watch and use the 24 hour rule for confirmation before buying.

Fingers crossed gf, MACD looks a tad overbought but we live in hope.

Yep your right about MACD Chris so lets get a momentum chart up and see if its still got positive ADX........

ohh yep very nice look at the strength of the green and blue lines on ADX plus on the chart itself its riding on the 10 day EMA.

Momentum indicator hasnt caught up with the chart but its a lagger anyway.

Look at the increase in volume aswel.

Ill still give it the cofirmation rule but fingers up from me.

Trying again to break out albeit on low volume.