TalkTalk in discussions over rolling out ultrafast broadband

TalkTalk is in preliminary talks about financing a countrywide roll-out of ultrafast broadband that would rival the network owned by BT.

On Thursday, the group said that an aggressive push to sell additional products to its existing customer base was paying off, which has led it to upgrade its revenue growth target.

TalkTalk is poised to invest in rolling out its own infrastructure, including fibre broadband and smaller cellular networks, as it builds a customer base spanning TV, mobile and broadband.

The company said it would "be possible to build a 10m household network across the UK", adding that preliminary discussions on financing the roll out have been positive.

TalkTalk is positioning itself as a provider of so-called "quad play" bundles of TV, telecoms fixed broadband and mobile, which create greater customer loyalty and the chance to drive revenue growth.

"For us, quad play is an offensive strategy," said TalkTalk chief executive Dido Harding. TalkTalk is competing with BT and Sky for customers that want a single provider for telecoms and TV, although is positioned as a cheaper alternative.

TalkTalk said it would grow its network "significantly" over the next five years.

Ms Harding warned that the mergers and acquisitions under way in the British telecoms sector would push up prices for consumers but promised that TalkTalk would keep trying to bring better deals to the market.

BT is acquiring mobile group EE for £12.5bn, while Hutchison Whampoa is buying Telefonica's British business O2 to merge with Three. Ms Harding ruled out making a bid for Tesco's mobile business, however. "Fundamentally, consolidation is never good for consumers."

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"Openreach would be a massively better company [split from BT]. It would have a greater incentive to drive prices down [and] have the balance sheet itself to invest in the network."

TalkTalk raised its revenue growth target in the expectation that customer numbers would continue to rise across its product lines. Ms Harding said that just 12 per cent of customers took its mobile service, and about 37 per cent TV, which gave "lots of growth to aim for".

TalkTalk said that revenue grew 4.2 per cent to £1.8bn, while pre-tax profit rose 3.2 per cent to £32m. Revenue is expected to grow by 5 per cent for the next two years, slightly higher than TalkTalk's previous target. The company said that it would meet its earnings margin target of 25 per cent in the 2017 financial year.

Ms Harding said TalkTalk expected to continue to increase revenues by at least 5 per cent per year after 2017.

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