(Alliance News) - FTSE 250-listed TalkTalk Telecom Group PLC on Tuesday said revenue fell in the first quarter of financial 2021 partly due to Covid-19, but noted order volumes have recovered and its "outlook remains strong".
The home phone & broadband provider said its first-quarter saw stable growth, strong cash conversion, and reduction in net debt. It added that it expected headline core earnings for its 2021 financial year to be stable or to grow, an improvement on its previous forecast of flat.
Headline off-net revenue was GBP358 million for the quarter ended June 30, down 7.5% from GBP387 million in the first quarter of financial 2020. The contraction was mainly due to the effects of Covid-19 which encompassed trading restrictions, live sport cancellations and ongoing industry-wide declines in voice usage exacerbated by the lockdown.
TalkTalk said the revenue, and consequently margin, decline was offset by cost savings, with all key cost areas significantly lower year on year.
"Ethernet order volumes and installs in June have recovered from lower levels in April and May, and now exceed the prior year. The outlook remains strong, despite Covid-19, with stable growth versus last year's financial year," TalkTalk said.
New customers were drawn to the company's fibre products with 84% of them choosing the product, compared to 70% in the first quarter the year prior.
The company added that the expected GBP15 million hit from Covid-19 "remains conservative" based on current bad debt trends in both its consumer and B2B markets.
However, the Salford-headquartered firm said revenue, new high-speed internet customers and other trends have improved in June and July as lockdown restrictions eased.
Data usage increased nearly 40% year on year over the quarter, likely due to an increase of time spent at home during the lockdown.
Chief Executive Tristia Harrison said: "As the UK's internet usage continues to soar, our role as the UK's only scale affordable provider of fibre broadband has become even more important.
"Given this, we see a positive outlook to the first half and are confident in our full-year plan to deliver stable to growing headline EBITDA with strong cash conversion."
The stock was down .% at 77.25 pence in London on Tuesday morning.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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