May 10, 2017
TalkTalk warns of profit fall in 2017-18 under new strategy
Shares in TalkTalk fell 11 per cent on Wednesday after new management cut the telecoms company's dividend, warned of lower earnings in 2017-18 and outlined a strategy revamp that prioritises customer growth. TalkTalk also abandoned its ambitious plan to build a mobile network as part of the revamp under Sir Charles Dunstone, executive chairman and the largest shareholder, and Tristia Harrison, who this month succeeded Dido Harding as chief executive. Revenue fell 3 per cent to £1.78bn in the year to March 31, while earnings before interest, taxation, depreciation and amortisation rose 17 per cent to £304m. The profit fell well short of TalkTalk's target of between £320m to £360m, and the company said earnings would decline to a range of £270m and £300m in the year to March 2018 as it invests in customer growth. In Wednesday morning trading, TalkTalk's shares fell almost 11 per cent to 162.46p. Sir Charles, who was chairman of TalkTalk without executive responsibilities between 2010 and this month, said: "My focus for the company is growth, cash generation and profit in that order. We will be smart about how we invest, focusing on our fixed network, avoiding other capital intensive distractions." The new management has decided to ditch TalkTalk's plan to adopt an "Inside out" mobile strategy that would have involved using radio spectrum to build a small network based on customer premises.
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