(Adds management comments, details) By Lilly Vitorovich Of DOW JONES NEWSWIRES LONDON (Dow Jones)--TalkTalk Telecom Group PLC (TALK.LN) said Friday it has secured a new deal with Vodafone Group PLC's (VOD.LN) U.K. wholesale business to give its customers mobile voice and broadband services alongside their home phone and broadband as it reported a 31% increase in first-quarter revenue and reaffirmed its full-year guidance. TalkTalk, Britain's biggest broadband provider with 4.2 million broadband customers, will add contract mobile voice tariffs and mobile broadband to its range of services for its existing and new landline and broadband customers from this autumn. Despite concerns that the U.K. economy may stumble as the government prepares to slash spending, Chairman Charles Dunstone said he isn't worried about the effect on TalkTalk. "Our positioning and the pricing that we have makes us very, very appealing to people who are trying to cut back or are nervous about their expenditure. Of all the businesses that I can think of, we feel well insulated from the effects that we might see if there is a double dip or whatever it may be," Dunstone told Dow Jones Newswires. Unlike rival BT Group PLC (BT.A.LN) and Cable & Wireless Worldwide PLC (CW.LN), TalkTalk has no government contracts. Rather it sees the cuts as an opportunity to grow its business-to-business division, Chief Executive Dido Harding said. Revenue rose 31% to GBP444 million in the first quarter of fiscal 2011, bolstered by the acquisition of Tiscali in July 2009 and in line with market expectations. The group added 34,000 net new broadband customers in the quarter, taking TalkTalk's total broadband customer base to 4.2 million. But that's down from 42,00 net broadband customers added in the fourth quarter of fiscal 2010 as the first-half of the year is traditionally the group's weakest. Broadband average revenue per user rose slightly to GBP23.90 in the first quarter from GBP23.30 a year ago. TalkTalk expects revenue to rise around 6% to 8% in fiscal 2011 and confirmed that it would add between 140,000 and 180,000 net broadband customers in the year. In May, it also flagged an earnings before interest, tax, depreciation and amortization margin of 14.5% to 15.5% in fiscal 2011 as it extracts further synergies from the integration of Tiscali. The integration, which includes migrating Tiscali customers onto TalkTalk's network and billing system, is the number one priority for management this year, said Dunstone who owns around a third of TalkTalk and has no plans to sell down his stake any time soon. It is due to be completed by the end March 2011, he added. At the end of the first quarter, 77% of TalkTalk's customers were using its network. By the time the integration is completed, around 83% to 84% of TalkTalk's customers will be on its network, while the remaining will be using BT's network as part of a wholesale agreement. TalkTalk split from mobile phone retailer Carphone Warehouse Group PLC at the end of March, 21 years after Charles Dunstone founded the company. Carphone Warehouse continues to run its TalkMobile mobile virtual network operation with Vodafone. At 0742 GMT, TalkTalk shares were down 3 pence, or 2.1%, to 121 pence, valuing the company at GBP1.1 billion, in a lower London market. -By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com (END) Dow Jones Newswires July 30, 2010 04:03 ET (08:03 GMT)
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