15th May 2014 08:11
LONDON (Alliance News) - TalkTalk Telecom Group PLC Thursday raised its dividend and outlined its expectations for the financial year 2015, as pretax profit was hit by investments and it continued its 'Making TalkTalk Simpler' restructuring programme in the year to end-March 2014.
The triple-play telecommunications company posted a total dividend of 12.0 pence, up from 10.4 pence in the previous year. TalkTalk expects to grow its dividend by no less than 15% in the financial year 2015.
The company posted a pretax profit of GBP31 million for the recent financial year, down from GBP141 million the year before, despite seeing revenue rise to GBP1.72 billion from GBP1.67 billion, as the company upped its investment, scaled up its television services, and increased its advertising spend. It posted an exceptional charge of GBP22 million for the year relating to its Making TalkTalk simpler programme.
Depreciation and amortisation charges rose to GBP112 million from GBP102 million, as it continued to invest in its network and IT systems, although this was offset by a decline in amortisation charges, as the AOL customer base it acquired in 2006 became fully amortised in 2013.
Revenue growth was driven by the take-up of television, fibre and mobile services, as well as raising prices.
Corporate revenues rose 5.6% during the year, as increased take-up of data product revenues rose, but this was offset by a decline in legacy voice revenues due to a move from premium rate numbers and a decreased in regulated call termination rates.
Off-net revenues continued to decline 25%, as the company expected, due to the continued wind-down of its voice only and off-net broadband customer bases. Off-net revenues are generated by leasing connections from BT Group PLC's wholesale business.
The company added 687,000 television customers during the year, taking its total TV customer base to 917,000 at the end of the year. Following the year end, the television customer base stands at over 1 million as at May 12.
TalkTalk is looking to reduce its overheads via its Making TalkTalk Simpler programme, which is designed to simplify the way in which customers engage with the company. It expects the programme to product further savings of over GBP40 million by the financial year 2017.
For the financial year 2015 the company expects to see a modest growth in net customer adds, with a similar number of net TV additions as it saw in 2014. It expects revenues to grow by at least 4%, and overheads to fall below 2013.
Its customer acquisition and marketing costs are expected to fall, helping drive growth in earnings before interest, tax, depreciation and amortisation. TalkTalk continues to expect capital expenditure within 6% of revenue for the year, and exceptional costs relating to Making TalkTalk Simpler are expected to be between GBP20 million to GBP25 million.
The company reiterated its target for a compound annual growth rate of between 2% to 4% between 2014 and 2017, and expressed confidence in meeting its EBITDA margin target of 25% by 2017.
In April TalkTalk announced that, alongside British Sky Broadcasting Group PLC and CityFibre Infrastructure Holdings PLC, it had entered into a joint venture to establish new broadband services in the city of York, with the aim of building a competing infrastructure to rival BT PLC's Openreach.
The company confirmed Thursday that it intends to bring the same ultrafast broadband service to two further cities, and is "excited by the long term potential for a national roll-out."
Shares in TalkTalk were trading up 1.3% at 295.10 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
TALK.L