TalkTalk Q3 results: share price falls after earnings hit by customer acquisition costs

TalkTalk Telecom has told investors that it will miss it full year guidance target due to its earnings being impacted by costs associated with acquiring new customers and a change in accounting standards, which took its toll on its share price which fell as much as 8% on Friday morning.

‘We continue to see strong trading momentum in the business, with customer growth ahead of expectations,’ TalkTalk CEO Tristia Harrison said. ‘Q3 was the eighth consecutive quarter of rising customer numbers and we saw record demand for fibre.’

‘The change to earnings guidance is due to IFRS 15 timing adjustments and investment in growth. Year on year, we have increased revenue by growing the base and stabilising ARPU, which combined with lower costs is driving improved earnings,’ she added.

TalkTalk results: key figures

Despite investors disappointment in the recent trading update, TalkTalk’s customer base has grown by more than 44,000, up from 37,000 compared with the same period a year ago, with double-digit growth seen in both its consumer and B2B – bringing its total customers base to more than 4.2 million.

The telecoms provider has also seen its total revenues increase 2.9% to £386 million, helped by a strong uptake in superfast fibre with an additional 146,000 subscribers joining its service in Q3.

TalkTalk’s share price takes a tumble

The FTSE 250 tumbled more than 8% after downgrading its full year earnings expectations on Friday, with TalkTalk’s adjusting its forecast from around £259 million to a range between £245 - £250 million.

However, despite the profit warning its CEO contends that that ‘underlying business is on track’ and that its investment into customer acquisition and the company’s reorganisation will help the company deliver strong earnings growth in 2020.