Shares in TalkTalk plummeted by 17% in early trading after it reported a £75m loss and warned that full year profits will be at the lower end of its guidance.
The Embattled telecoms company, which is facing the legal fallout of data breaches following a cyber-attack in 2015, ran up £90m in exceptional charges relating to restructuring to refocus on its core proposition as a budget internet provider.
In February, Charles Dunstone, who created TalkTalk in 2002, returned as executive chairman in an attempt to renew investors’ faith.
In May, Dido Harding left the company after seven years and was replaced as chief executive by Tristia Harrison.
Harrison said the business had reversed customer losses and seen “strong demand” for its new cut-price TV, internet and phone services.
However, investment to attract more customers would leave TalkTalk’s full year profits at the lower end of its £270m-£300m range, she said.
“We expect to step up our planned investment in growth in the second half, as we take advantage of the strong demand,” Harrison said. “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.”
The company added 46,000 customers in the first six months of its financial year, compared with a drop of 29,000 in the same period last year.
TalkTalk said its broadband base grew for the third successive quarter and customer churn, the rate at which people leave for rivals, had improved year on year from 1.5% to 1.3%.
“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 homes and businesses,” Harrison said.
TalkTalk reported a pre-tax loss of £75m in the six months to September, compared with a £30m profit in the same period last year, as revenues fell by 5% to £828m.
“When we simplified and reset the business in May, we said our priorities were growth, cash and EBITDA [earnings before interest, tax, depreciation and amortisation], in that order,” the chief executive said. “The first half performance shows we are delivering on that plan.”
The company took a £59m exceptional charge for costs including £20m associated with “implementing changes to the group’s organisational structure under the new leadership team”.
There was also a £31m charge at its mobile business as a result of a strategy review.
The company said it would launch a “simple and compelling new mobile proposition” by the end of the year.
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