Talktalk hails surge in users as Dunstone faces investor revolt

TALKTALK sought to reassure investors by trumpeting a big surge in customer numbers ahead of a potentially fraught vote on the future of Sir Charles Dunstone, its chairman, at today’s annual general meeting.

The broadband provider attracted an extra 80,000 users in the three months to June, four times as many as last year but down from the 109,000 it added in the three months before.

That took its total customer number to more than 4.2m, pushing headline revenues (excluding its non-core carrier and off-net units) up 4.1pc to £382m.

Wilton Fry, an analyst at the Royal Bank of Canada, said the numbers were “weak” as revenues came in slightly behind expectations. And Robert Grindle, of Deutsche Bank, said investors might take fright at the fact customer growth came entirely from Talktalk’s wholesale division after a “modest decline” in retail customers. But having slumped by more than a third over the past year, Talktalk’s shares rose 8.0pc to close at 118.7p yesterday.

The telecoms company is battling against tough competition from the likes of BT and Sky, and fell to a loss of £73m last year as it counted the cost of an ambitious turnaround plan aimed at simplifying its structure. An attempt to sell its direct business-to-business arm to rival Daisy Group fell through in June after the buyer failed to come up with finance for the deal. But it has managed to grow its customer numbers by competing on price.

The update came ahead of Talktalk’s AGM in Salford today, which is likely to see some shareholders rebel against Sir Charles’s re-election.

Earlier this month, the Investment Association, which represents institutional shareholders, issued a so-called “red-top alert” against the company after it took the controversial step of issuing new shares worth 20pc of its value to raise £200m to pay down its debts in February. ISS, the influential shareholder advisory group, has advised its members to vote against the re-election of Sir Charles and three other directors.

The billionaire founder of Carphone Warehouse owns 29pc of Talktalk, which was spun out of the electronics retailer in 2010. Talktalk said it expected to add 150,000 customers this year and was on track to grow earnings before interest, tax, depreciation and amortisation by 15pc.

But its churn rate, a key industry measure of how many users cancelled their packages, ticked up slightly to 1.28pc as it lost a fraction of 500,000 customers whose contracts came to an end.