TalkTalk had a bad quarter, with a shrinking customer base and job cuts on the cards
Internet service provider TalkTalk lost 25,000 customers to rival broadband providers during its third fiscal quarter, due to problems migrating former Tiscali customers onto its billing system.
In the final three months of 2010, TalkTalk’s total broadband customer base shrunk from 4.3 million to 4.2 million. While broadband revenue rose 7.5 percent, total group turnover also slipped down from £446 million to £444 million.
The company admitted that the loss of customers reflected “continuing churn in the former Tiscali base, as the network and systems migration processes continued to create disruption for some customers”. However, it claims that the losses were offset by higher spending by remaining customers.
TalkTalk absorbs Tiscali
The Carphone Warehouse, former parent company of TalkTalk, acquired Tiscali UK in May 2009 for £236 million. In January 2010 it ditched the Tiscali brand name and began integrating the two companies. TalkTalk broke away from Carphone Warehouse and became a publicly listed company in March 2010.
The merger with TalkTalk raised concerns that many of Tiscali’s customers would face larger bills, after Tiscali’s broadband-only users were warned that they would see a price rise of £5 per month if they did not take the TalkTalk phone line rental service, and many disgruntled Tiscali customers were lured away by rival ISPs.
The transition left a third of Tiscali subscribers with higher bills than previously, and some customers found themselves with no Internet access for several days during the migration.
“We successfully completed the last major milestone in our One Company integration programme at the end of January, migrating former Tiscali customers onto our core billing system, ahead of schedule,” said Dido Harding (left), chief executive of TalkTalk.
“The integration programme has caused some customer disruption, but provides a strong platform for us to deliver a better experience for all our customers, and enables us to drive further operating efficiencies across the whole business.”
580 jobs lost
TalkTalk has also announced it is planning a “major re-organisation” of its business operations, which will result in the loss of approximately 580 jobs. The move will reportedly save the company £25 million per year.
Meanwhile, TalkTalk is concentrating on unbundling customers from BT exchanges onto its own network. The company is currently unbundling 55 new exchanges, with the aim of offering access to 93 percent of the population.
Harding said the new strategy was aimed at “simplifying our business, improving our operating margins, and delivering value for money products and services for our existing customers.”