TalkTalk divi cut hits shares
INVESTORS pulled the plug on TalkTalk yesterday, as the broadband company’s shares plunged by more than 7 per cent.
The fall came as executive chairman Sir Charles Dunstone rang the changes after retaking the reins of the company he founded by slashing dividend payouts and downgrading earnings forecasts in a bid to win more customers.
Dunstone, who swapped his non-executive role to full-time boss after TalkTalk announced in February that Baroness Harding would stand down as chief executive after seven years, also announced the scrapping of plans to build a new type of mobile network.
“My focus for the company is growth, cash generation and profit – in that order”, said Dunstone, who owns about 31 per cent of the company.
He said the promotions of Tristia Harrison to chief executive and Charles Bligh to chief operating officer had created “a clear and simpler operating structure and I can already see the difference they are making”.
He added: “We will be smart about how we invest, focusing on our fixed network, avoiding other capital intensive distractions.”
TalkTalk is trying to bring under control its debt, which rose from £679million to £782million last year. The company is also rebuilding after a major cyber attack in 2015, which cost it £60million, as it attempts to lure customers away from rivals such as Sky and BT.
The company posted 17 per cent higher annual pre-tax earnings of £304million on 3 per cent lower revenue of £1.78billion, while its customer base also returned to growth, expanding by 22,000 in the fourth quarter.
But it cut its final dividend from 10.58p to 5p and warned that pre-tax earnings next year would be between £270-300million, compared with analysts’ forecasts of about £324million.
Sir Charles, who created TalkTalk in 2003 as an offshoot of his Carphone Warehouse group, said: “We have reorganised the business to focus on fewer, clear priorities that are focused on investment in our core fixed network and have reassessed our mobile strategy.
“While we remain committed to offering all our customers a compelling mobile proposition, we have decided not to pursue an inside-out mobile network strategy, and instead we will continue to work closely with Telefonica UK on the right platform and customer offering.” TalkTalk shares fell 13¾p to 168¾p.