TalkTalk Q3 results: share price falls after earnings hit by customer acquisition costs
The British telecoms provider will miss its full year guidance target after its earnings were hit by costs related to acquiring new customers, with the news sending its share price lower on Friday.
TalkTalk Telecom has told investors that it will miss it full year guidance target due to its earnings being impacted by costs associated with acquiring new customers and a change in accounting standards, which took its toll on its share price which fell as much as 8% on Friday morning.
‘We continue to see strong trading momentum in the business, with customer growth ahead of expectations,’ TalkTalk CEO Tristia Harrison said. ‘Q3 was the eighth consecutive quarter of rising customer numbers and we saw record demand for fibre.’
‘The change to earnings guidance is due to IFRS 15 timing adjustments and investment in growth. Year on year, we have increased revenue by growing the base and stabilising ARPU, which combined with lower costs is driving improved earnings,’ she added.
TalkTalk results: key figures
Despite investors disappointment in the recent trading update, TalkTalk’s customer base has grown by more than 44,000, up from 37,000 compared with the same period a year ago, with double-digit growth seen in both its consumer and B2B – bringing its total customers base to more than 4.2 million.
The telecoms provider has also seen its total revenues increase 2.9% to £386 million, helped by a strong uptake in superfast fibre with an additional 146,000 subscribers joining its service in Q3.
TalkTalk’s share price takes a tumble
The FTSE 250 tumbled more than 8% after downgrading its full year earnings expectations on Friday, with TalkTalk’s adjusting its forecast from around £259 million to a range between £245 - £250 million.
However, despite the profit warning its CEO contends that that ‘underlying business is on track’ and that its investment into customer acquisition and the company’s reorganisation will help the company deliver strong earnings growth in 2020.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets