TalkTalk Telecom Group PLC’s Revenue Hikes

TalkTalk Telecom Group PLC (LON: TALK) sees increased demand across phone, tv and broadband packages.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 4 February, 2014 9:10 am GMT

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TalkTalk (LSE: TALK) added 6p to 316p during early trade this morning after the telecom company unveiled a growth in revenue during the third quarter, partly as a result of successful new products.

Revenue grew by to £436 million from £415 million, or 5% overall. In comparison with the same quarter in 2012, net reveue grew by nearly 10% to £320 million.

During the quarter TalkTalk added 175,000 net new TV customers to its base of 167,000. The increase in growth was helped by the success of TalkTalk’s new Essentials package, with continued strong demand for Plus TV. In total, TalkTalk’s TV customer base adds up to 732,000.

The number of new customers taking up fibre optic broadband grew by 35,000, reaching a base of 35,000. New mobile customers were also added, with 24,000 customers signing up following strong promotional activity, with its customer base reaching 260,000 overall.

Dido Harding, the chief executive, commented:

“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. 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.”

Prior to today, City expects were predicting TalkTalk’s upcoming annual results to show earnings equivalent to 13p per share, and a dividend of around 12p.

Following this morning’s price movement the shares may therefore trade on a P/E of 24 and offer a potential income of 4%.