LONDON (Alliance News) - TalkTalk Telecom Group PLC said Tuesday it expects its full-year earnings before interest, tax, depreciation and amortisation to be at the lower end of market expectations as a result of buying Tesco PLC's loss-making Blinkbox business, and of lower cost savings than planned.
The telecommunications firm said its revenue was up 4.2% to GBP449 million in its third quarter to end-December from GBP431 million a year before.
TalkTalk said that cost savings in its current year are likely to be GBP10 million to GBP15 million lower than it had previously planned.
The company is cutting costs as part of what it calls its 'Making TalkTalk Simpler' plan, and agreed to sell its base of broadband customers whose connection is provided via BT Group PLC's wholesale business to Daisy Group PLC at the end of the quarter, which it said will help it simplify its product portfolio.
TalkTalk continues to expect its revenue to grow by at least 4% for the full year.
The telecommunications firm reiterated that it is on track to see a 4% compound annual growth rate in revenues between the financial year 2014 and the financial year 2017, and a 25% earnings before interest, tax, depreciation and amortisation margin by financial 2017.
TalkTalk added 115,000 new television customers in the quarter, taking its customer base for television to 1.3 million. Following the end of the quarter it signed a deal with the US's Netflix Inc to launch the Netflix service to TalkTalk its customers, and acquired Tesco's on-demand video content service Blinkbox.
The company has begun integrating Blinkbox with its existing business, and noted that whilst it will absorb modest operating losses of GBP3 million to GBP5 million during its fourth quarter, it expects Blinkbox to make a positive contribution to its television business in the following year.
TalkTalk also acquired Tesco's broadband and voice base of around 75,000 broadband users and 20,000 voice households. It expects to bring these customers onto its network in the first quarter of the financial year 2016.
In its third quarter, TalkTalk said it added 15,000 broadband customers and 50,000 mobile customers.
The company signed a new multi-year deal with Telefónica UK for access to 4G and national roaming services in the UK over its 02 network, which it said is a "major step forward" in its plans to build a "profitable quad-play business", meaning it offers its customers fixed line, television, broadband and mobile services.
TalkTalk added 88,000 fibre broadband customers, taking its total fibre base to just under 400,000. The company said that its new fibre-network joint venture in York with Sky PLC and CityFibre Infrastructure Holdings PLC continued to make progress during the quarter, and it remains on track to connected the first customers onto the network later this year.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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