TalkTalk takes swipe at competitor over pricing fairness

TalkTalk has launched its Fairer Broadband Charter calling into question whether competitors know the definition of simple concepts such as honesty and fairness.

According to research from TalkTalk, 87% of customers feel it is unfair providers raise prices mid-way through contracts, with 54% of consumers supporting a complete ban on these price hikes. While these might seem like obvious statements to make, they do fit quite comfortably upon the beautifully groomed high-horse TalkTalk CEO Tristia Harrison is trotting along currently.

“Telecoms companies have been ripping-off consumers for far too long,” said Harrison. “The industry has to change to rebuild trust with consumers. We led the way two years ago and became the first provider to guarantee no mid-contract price rises. It’s proved hugely popular and today we’re going even further. Our Fairer Broadband Charter sets out three simple ways we’ll put customers first. I’m challenging our rivals to follow our lead so that the whole industry can rebuild trust with customers.”

While any research conducted or commissioned by a telco should be taken with a plate full of salt, TalkTalk does have a point and the Fairer Broadband Charter should create a position where customers do feel valued. What is quite interesting is a challenger brand actually offering something of value to a customer, instead of initiating a race to the bottom. While lower prices are often appreciated by customers, margins are realised elsewhere perhaps explaining poor performance and woeful customer service. It could be seen as somewhat of a hollow victory.

The Fairer Broadband Charter is essentially a challenge to the industry, with TalkTalk hoping to set the pace with other telcos following suit. Perhaps marketing campaigns down the road will be built on the ‘look what we made everyone else do’ or ‘they all needed to copy us’ messages. It isn’t necessarily the worst idea we have ever come across for a challenger brand.

Looking at the three pillars, the first is a continued commitment to maintaining the agreed upon prices throughout the contract. Sounds simple, but all major ISPs have introduced a mid-contract price hike to some degree over the last 18 months according to TalkTalk. Secondly, a connection guarantee will be introduced, allowing new customers to ditch the contract in the first 30 days if they are not happy. This is not necessarily a new one, as Vodafone introduced such an idea recently. Finally, the TalkTalk team will contact customers before their contract ends to ensure they do not get automatically put onto a higher priced plan upon automatic renewal.

These are of course all nice ideas, but it shows the woeful state of affairs in the telco industry if this new Charter is deemed going above and beyond. In most other industries, this would be considered the status quo or bare minimum requirements. For too long customer satisfaction has been an afterthought, instead focusing on enticing new customers with embarrassingly-poor Kevin Bacon adverts which make the brand seem dated, desperate and as creative as a dull shade of worn leather.

The tide is beginning to turn but the traditional telcos, in both mobile and broadband, are having their hands forced by challenger brands.

UK economy is solid despite infrastructure, but that needs to change – TalkTalk CEO

Dodgy connectivity has not hindered the economy in the past, but the UK cannot rely on precedent if it is to be an economic heavyweight in the future.

“I think it should be said, the economy has been built despite our infrastructure not because of it,” said TalkTalk CEO Tristia Harrison at the Connected Britain event in London.

It is a statement which holds a lot of truth. As an island with a small population and limited natural resources, the UK has always punched above its weight in the global economy. This is due to a number of different factors, access to trade routes in previous centuries laid the foundations, but moving forward heritage means very little. If you don’t have a suitable digital infrastructure, you don’t have a chance in the digital economy.

“Without urgent action, we risk being left behind,” Harrison added.

The UK is currently in a suspect position. FTTH penetration is less than 5%, and while there are some interesting initiatives, positive statements of intent and newly emerging capital, more still needs to be done to ensure the UK does not slip into the realms of mediocrity.

While the government’s role in the whole saga does remain up for debate, we are noticing a slight change in attitude and success. We might make the odd poke at Minister for Fun Matt Hancock and his team, we are starting to feel more confident in his administration.

Last week at 5G World, Hancock commented the government was going to focus on regulating the industry and providing help with investment, but leave the business of telecommunications to the telcos. This was a welcome statement, and this morning Minister for Digital Margot James also added confidence to the role of government.

“I want to talk about what the government is doing to support all the efforts you are doing to get the country super connected more quickly,” James stated during her keynote.

The aim here is simple; rid the country of the digital divide, remove barriers to deployment, aid the telcos with investment and improve the UK’s competitiveness on the international stage. Although we will have to wait a couple of weeks for the Future Telecoms Infrastructure Review to get a concrete idea of the government intentions and role, the comments are encouraging; it’s about creating the right environment for digital to thrive, not getting too involved.

James also feels the £400 million fund to aid the rollout of networks will be a suitable amount of cash, but this is not necessarily the ceiling. While there has been little evidence of the vast investments promised by the government to date, James highlighted her team would be constantly accessing what levels of government investment would be deemed appropriate and within the rules. This £400 million might go up, but we would also like to see more of it actually being spent.

The UK is lagging behind the leaders in the digital world as it stands. There seems to be a lot of talk, a lot of posturing and a lot of disagreements, but sooner or later we will need to see some more concrete action. CityFibre CEO Greg Mesch commented he almost missed the beginning of the conference due to being held up by Openreach roadworks, which he somehow managed to take credit for, so maybe this is the watershed moment we have been waiting for in the UK. Perhaps in 12 months we’ll be writing more positive headlines.

Profits down but prospects up at TalkTalk

TalkTalk has unveiled its full year results and while profits are down, restructuring costs have hit the spreadsheets and the dividend has been cut, so prospects aren’t looking too bad for the group.

The telco has seemingly found itself an inglorious niche. Competitors might be chasing the big bucks and the convergence dream with shiny content offerings and cringe-worthy adverts with irrelevant celebrities, but TalkTalk is offering something a bit more basic; internet for £18.95 a month, take it or leave it.

Compared to this point in 2017, TalkTalk added 190,000 customers in the year, including 109,000 in the fourth quarter, while churn fell to 1.22%, a record for the team. Virgin Media, Sky and BT might be able to offer thousands of hours of viewing pleasure for the consumer, but some don’t want it or can’t afford the premium which is slapped on content deals. Some just want connectivity for a low-cost, and TalkTalk is seemingly here to serve that niche.

“When we reset TalkTalk a year ago, we said we would focus on delivering sustained customer growth whilst radically simplifying the business,” said CEO Tristia Harrison. “One year into the strategy, we are making good progress on both. Our customer base grew by 192k in FY18, underpinned by our unique propositions and our lowest ever churn.

“We have also made real progress in simplifying the business to focus on core, fixed connectivity. This will continue into FY19 with the sale of our direct B2B business, as we focus on cementing our position as the market leader in our core B2B markets, Partner and Wholesale, which represent over 80% of our B2B business and continues to grow strongly.”

Total revenues are down year-on-year, and it has made the decision to sell its direct B2B business to Daisy for £175 million, though prospects do look good. The last 12 months has shown there is appetite in the market for no-frills connectivity offers, revenue is forecast for growth, ARPU is stabilising, customer numbers are forecast to go up, and a fibre-network partnership with the infrastructure investment arm of M&G Prudential looking very promising as well.

Sometimes you don’t need second-rate breakfast-themed adverts, or pointless and cringeworthy cartoon illustrations of public figures, sometimes you just have to offer customers what they want. No-frills connectivity is not glamourous, nor is it sexy, but it seems to be working for TalkTalk.

We need to talk about TalkTalk – Ofcom

UK telecoms regulator Ofcom has done a big survey on customer satisfaction with CSPs and TalkTalk has the lowest customer satisfaction levels.

Ofcom conducted over 3,000 interviews at the start of this year to find out what people think of their communications service providers. The results are split down into landline, broadband and mobile providers but the lowest satisfaction score of all was TalkTalk for broadband. It scored a 72% satisfaction rating according to criteria that you can find more about here.

You can see tables summarising the findings below. TalkTalk was also one of the worst for landline, while Vodafone and Virgin Mobile jostled for bottom spot among the major mobile providers. Plusnet has the highest broadband satisfaction, but isn’t so great when it does screw up, BT/EE seems to have kept on top of its landline service and Giffgaff is kicking ass in mobile.

“People often focus on price when they’re choosing a phone or broadband provider. But there are big differences in the customer service offered by providers,” said Lindsey Fussell, Ofcom’s Consumer Group Director. “We’re encouraging people to look beyond the price and consider customer service too. In such a competitive market, companies simply can’t afford to let their service standards slip. If they don’t up their game, customers can vote with their feet.”

Ofcom also tracked the likelihood of respondents to recommend a service to a friend and the results more or less correlated with the satisfaction scores. It concluded with its standard spiel about how hard it’s working to get telcos to sort themselves out, whil USwitch came out with its usual comments imploring people to used its service if they’re not happy with their current provider.

Broadband

Ofcom May 2018 complaints broadband

 

Landline

Ofcom May 2018 complaints landline

 

Mobile

Ofcom May 2018 complaints mobile


What do you think?

Following comments from the European Data Protection Supervisor, do you feel the internet giants are taking advantage of the digital economy?

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TalkTalk shares hit by £75 million loss and weak outlook

UK telecoms group TalkTalk saw its shares drop significantly upon announcing a negative set of half-yearly earnings.

The data-points most troubling to investors will have been a loss before tax of £75 million, which compares especially poorly with a £30 million profit in the same period last year. To add to the gloom EBITDA was down to £95 million from £144 million a year ago and the company is guiding that full-year EBITDA will be at the low end of guidance.

TalkTalk shares fell by as much as 17% on the announcement, but at time of writing has recovered somewhat to be down more like 10%. One reason for this could be that the company’s claim that these numbers were exceptional due to the strategic measures being put in place, including a change to its MVNO, and a general drive to reposition itself as the leading UK value ISP. Maybe, on reflection, investors were OK with TalkTalk taking a short term hit to give its cunning plan a kick-start.

“When we simplified and reset the business in May we said our priorities were growth, cash and EBITDA, in that order,” said Tristia Harrison, Chief Executive of TalkTalk. “The first half performance shows we are delivering on that plan. We have now delivered a third consecutive quarter of growth in our broadband base, with both Retail and Wholesale bases growing; returned to on-net revenue growth; and delivered lower churn than a year ago.

“Our clear value proposition is resonating strongly against an uncertain economic environment and underpins our plan to simplify and focus all our investment in delivering affordable, reliable fixed connectivity to both homes and businesses”.

“We expect to step up our planned investment in growth in the second half, as we take advantage of the strong demand we are seeing for our fixed low price plans; fibre take up and affordable propositions in both our residential and B2B markets. Our revised strategy of focusing the business on fewer, clearer priorities is re-establishing TalkTalk as the value provider of choice in the UK fixed connectivity market.”

You can see the key numbers below. There seem to have been some exceptional hits involving the MVNO and for general restructuring, but TalkTalk is also spending more on its network and on subscriber acquisition in spite of declining revenues. Even allowing for exceptional items TalkTalk seems to be struggling to balance the books right now and investors are unlikely to cheer up until it does.

talktalk full year outlook

talktalk q3 p&l

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