Exodus at TalkTalk as customers quit for broadband upgrades
TalkTalk has been hit by an exodus of customers as the struggling broadband business loses ground to rivals.
The telecoms group, which is owned by billionaire Sir Charles Dunstone, saw its customer base fall by more than 400,000 to 3.2m in the year to February.
It comes amid heavy cost-cutting at TalkTalk, which narrowly avoided collapse last year after securing an emergency cash injection from Sir Charles and other shareholders.
TalkTalk slashed roughly 350 jobs in 2024, according to its latest accounts, with further cuts expected in the coming year.
This helped to reduce operating costs by around £18m, while the company also cut back its marketing and customer acquisition costs by £50m.
But the cost-cutting has led to further drops in customer numbers amid tough competition, as challenger 'alt-net' firms offer more attractive upgrades.
While TalkTalk has traditionally been viewed as a cheaper broadband provider, it is now being undercut by rivals such as Vodafone and Sky.
In a further challenge, mobile provider Giffgaff, which is owned by Virgin Media O2, is trialling a new full-fibre broadband service priced at just £10 a month.
Meanwhile, TalkTalk burned through a further £285m last year, more than offsetting its £235m emergency cash injection.
While last year's bailout secured the company's short-term future, the company is still facing questions over its long-term prospects as it grapples with a £1.2bn debt pile.
The sharp drop in customers sparked a 7pc fall in revenues to £1.4bn, while this is forecast to fall further to between £1.25bn and £1.35bn in the coming year.
James Ratzer, an analyst at New Street Research, said the darkening outlook 'makes the longer-term story considerably more challenging and further reduces the chance of corporate activity'.
TalkTalk's financial troubles have fuelled speculation over dealmaking. The company split itself into three divisions in 2023 and has been seeking buyers for parts or all or part of the business.
Bosses previously held discussions with Australian investment giant Macquarie about selling a stake in the group's wholesale division for up to £500m, but talks broke down and existing shareholders were forced to pump in their own money.
TalkTalk suffered a further setback in October when Deloitte resigned as its auditor.
In a rare public rebuke, the 'big four' firm said it had repeatedly told bosses that internal controls over financial reporting were 'not at the level we would expect for groups of the scale and complexity of TalkTalk'.
Despite the cuts, TalkTalk has said it plans to relaunch its offering to customers. It also expects to make further cost savings in the coming year, including by moving its customer base away from copper networks to full-fibre.
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