TalkTalk’s turnaround sends shares surging 20%

A BROADBAND firm dogged by service problems yesterday signalled that the worst was over as it more than doubled its annual profits and stemmed customer losses.

Shares in TalkTalk Telecom, which lost thousands of customers in 2011, jumped 20 per cent after boss Dido Harding said the turnaround was “significantly ahead of schedule”.

The company, which has some four million customers, expects to lift its dividend for shareholders by 15 per cent over the next two financial years and unveiled pre-tax profits of £127 million in the year to the end of March, compared to £57m the previous year.

In addition, TalkTalk reduced customer net losses to 13,000 in the three months to 31 March, compared to 43,000 in the previous quarter.

The group was last year hit with a £3m fine for poor service and was forced to pay out £2.5m to customers who were billed despite cancelling their packages.

TalkTalk, which lost customers as a result of disruption after it bought Tiscali’s UK business, was ordered by regulator Ofcom to refund all consumers who were billed for cancelled services since 1 January, 2010.

Early last year the group announced that it would axe about 580 jobs, mainly in administration functions, such as finance, human resources and IT.

The job losses, across Irlam west of Manchester, London, Preston and Warrington, accounted for almost 13 per cent of TalkTalk’s UK workforce, bringing it to under 4,000.

Looking ahead, the launch of YouView, an internet-connected television service, in which TalkTalk is a joint partner, is on track to take place later this year.

The group lifted its earnings margin target and revealed it slashed operating costs by £54m to £612m in the period.

Shares closed up 26.3p at 159p, giving it a market value of about £1.4 billion.