Internet and telephone service provider TalkTalk Telecom has raised full year earnings guidance as projected cost savings come in ahead of schedule.
With just under two months of its financial year left to run, the company has raised full year earnings per share (EPS) guidance by 6% to a range running from 17.0p to 17.5p.
The guidance range for earnings before interest, tax, depreciation and amortisation (EBITDA) margin has been lifted to 18% - 19%.
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The company, which experienced well-publicised teething problems when it expanded rapidly through the acquisition of UK Internet service provider Pipex and the UK operations of Italian firm Tiscali, said churn - the industry terms for customers not renewing contracts - had stabilised, and it expects to see a net increase in customer numbers in the first half of 2012.
In the final quarter of 2011, the company's revenue edged up to £422m from £421m in the preceding quarter. Broadband revenue rose to £312m from £307m in the July-September quarter, while broadband average revenue per user (ARPU) rose to £25.30 per month from £24.70 in the prior quarter.
As expected, broadband revenue growth was partially offset by the quarter on quarter declines in non-broadband and TalkTalk Business revenue.
The group reduced its reliance on BT phone lines at 130 exchanges during the quarter and expects to "unbundle" a further 119 exchanges before the end of March.
Take up of the group's Plus, Boost and Homesafe products continued to grow during the quarter. Around a third of TalkTalk's new customers consistently opt to take the Plus service, which offers unlimited phone calls as well as broadband Internet, while the group is also having success persuading users of its basis service to upgrade. At the end of the quarter the company had 883,000 Plus customers - 22% of the entire customer base - and it reckons it on track to have over one million Plus customers by the year end.
Call volumes into TalkTalk's customer service centres fell again during the quarter, with 26% fewer calls than a year ago; 60% of customer contacts are now taking place online, the group said.
Dealing with customer queries online is cheaper than doing so over the phone, and the decline in customer service cells has contributed to cost savings feeding through earlier than expected, hence the earnings upgrade.
"Our operational achievements and strong financial performance give us confidence as we look ahead to delivering an exciting strategic agenda through 2012, including the launch of our TV proposition," said Dido Harding, Chief Executive of TalkTalk.
TalkTalk is part of the consortium behind the YouView project, the free-to-air TV-on-demand service to be launched this year.
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