1307 Thursday 31 January 2019

Fixed line telcomms firm TalkTalk are set to release their latest earnings tomorrow morning and with so much activity within the sector, this could be an important call. As well as their fixed line broadband offerings, TalkTalk also TV and mobile services placing them in direct competition with the likes of Vodafone, BT and Virgin Media. But with broadband being their main selling point, tough competition is coming as both Vodafone and BT plan to rollout their superfast lines later in 2019.

The current stock price of TalkTalk is 115.20, a price that may have investors considering it as being undervalued especially as this level sees it down 12% in the past year. Whilst the stock value is down for TalkTalk, it has outperformed the FTSE over the same time period.

Analyst expectations for the report indicate that the firm will have seen an increase in new clients during the last quarter and this will be much needed to ease the burden of debt that the company currently undertakes. However it is worth noting that the interest on debt is well covered by current earnings.

Recent broker recommendations on TalkTalk have come in the last week from UBS and Deutsche Bank with the former neutral and a target price of 120.00 and the latter with a buy and a target of 173.00. The 2018 dividend for TalkTalk was 4p, a huge decrease in the amounts seen before. The firm has paid a dividend consistently since 2011, but last year’s figure was way of the 2016 high of 15.87p.

Ahead of the report, email services for TalkTalk customers were temporarily suspended this morning due to a technical glitch, the firm have since resolved the issue. This is far from the data breech of 2015 that saw personal data of 21,000 customers accessed a hacker. At the time, TalkTalk were fined £400,000 but it is estimated that the total cost of the breech to be £77m to the firm. The case against the hacker was heard in court this week.

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