TalkTalk's annual profit more than doubles

The UK-based company reduced customer net losses to 13,000 in the first quarter.

Internet profits: is the worst over for the broadband company? Credit: Getty Images

The British broadband provider TalkTalk Telecom Group has posted pre-tax profits of £127m in the year to 31 March, compared to £57m the previous year.

Diluted earnings per share were 14.9p (2011: 3.7p), while operating profit was £145m (2011: £75m).

Headline revenue declined by 4 per cent to £1.69bn (2011: £1.77bn), while headline Ebitda increased 18 per cent to £326m from £276m. TalkTalk delivered its 20 per cent Ebitda margin target – set out 18 months ago – significantly ahead of schedule.

Operating expenses in the year fell by £54m from £612m the previous year to £558m.

In 2013, the company expects growth in average revenues per user (Arpu) and stronger margins from its improved customer mix to generate an Ebitda margin of 20 to 21 per cent.

During the year, the company unbundled 501 exchanges, taking its total network coverage to 2,508 exchanges and 91 per cent customer coverage – by some distance the largest unbundled estate in the UK. More than 200 further exchanges are currently scheduled to come on-stream before the end of financial year 2013.

The company ended the year with 3.75 million customers on its network, accounting for 92 per cent of our total broadband customer base, compared to 86 per cent last year.

Dido Harding, chief executive of TalkTalk, said:

Our focus on improving customer service has driven a real improvement in customer numbers and we are on track to deliver total customer growth in the current quarter. Our strategy has delivered a materially more profitable and stable customer base and a leaner, more efficient cost structure, giving us a strong platform from which to invest in growth opportunities such as YouView.

We are underscoring our confidence in the long term prospects for the business by raising our medium term Ebitda margin target to 25 per cent and a commitment to grow the FY13 and FY14 dividend by at least 15 per cent per annum, while at the same time investing in growth.

We will achieve our growth and margin targets through continued expansion of our network, further operating efficiencies, adding more services to become a genuine quad play, growing scale in our business to business operations and increasing our sales of superfast broadband. We believe the successful implementation of this strategy, supported by our financial strength, will deliver significant customer and shareholder value.