TalkTalk extends BSkyB deal, adds subs

UK service provider TalkTalk has reported strong take-up of its YouView-based TV offer for its fiscal third quarter and has extended its wholesale deal with BSkyB encompassing Sky basic Entertainment channels and catch-up content.

TalkTalk signed up 175,000 TV customers in the three months to December, taking its customer base to 732,000. The operator said that it had made 197,000 video-on-demand movie sales during the quarter, up from 123,000 in the previous quarter. TalkTalk said that over 25% of TV customers were now choosing to purchase content.

TalkTalk’s new deal with Sky, which extends its carriage of the latter’s entertainment channels and premium services for a further three years, will now include catch-up content for the first time. In addition, Sky will enhance the visibility of its Now TV internet TV service on TalkTalk’s YouView offering. The latter will now include live channels as well as on-demand.

Fllowing the introduction of multicast technology, all live Sky Sports channels on the Now TV service – including Sky Sports 1, Sky Sports 2, Sky Sports 3, Sky Sports 4, Sky Sports F1 and Sky Sports News – will be available to all of TalkTalk’s YouView customers on a flexible, day pass basis.

According to TalkTalk, a quarter of its TV additions were new TalkTalk customers. The company said its TV base had been boosted by its self-install offering and its new Essentials package as well as strong demand for its Plus TV offering. It said it was on track to have one million TV customers by the end of its financial year in March.

TalkTalk added 107,000 net subscribers overall in the quarter, including 84,000 former Post Office customers, and saw its fibre customer base grow by 35,000 to 177,000. It added 24,000 mobile customers, taking its total to 260,000.

TalkTalk said its churn had fallen to 1.6% in the third quarter from a second quarter peak. It expects to require fewer additions to maintain its customer base in the future, in part as a result of the stickiness of its TV offering, leading to lower subscriber acquisition costs.

“We are delighted with the material step up in our revenue growth during the quarter, which shows the powerful effect of combining a modestly growing customer base, disciplined pricing and promotional activity, and strong new product growth particularly in TV,” said CEO Dido Harding.

“In TalkTalk Business, we saw a strong acceleration in data products growth and successfully migrated Post Office customers onto our network. As a result this has been another quarter of successfully delivering against our objectives; we are confident that we are building a business with strong and sustainable revenue momentum and growing profitability. We are on track to deliver our FY14 guidance and our medium term targets of 4% revenue CAGR (FY14-17) and 25% EBITDA margin by FY17.”

TalkTalk’s revenue grew by 5.1% year-on-year to £436 million, while on-net ARPU grew 5.2% to £26.79.