Tuesday, February 7, 2012

TALK - TalkTalk

Much-maligned (and for good reason) fixed line telecom operator TALK.L (TalkTalk) is up 9% in early morning trading on positive IMS. They have raised guidance on EPS and EBITDA for the full year, and their cost savings are doing well, and their YouView launch is on track.

They also reported that "continuing improvement in customer experience has stabilised churn". TALK is a cheap'n'nasty phone and ISP, which has attracted much criticism from the press, and has been found guilty last year of mis-selling by Ofcom, the communications regulator. Check out online forums, where there are accusations aplenty over their contract periods and poor service. From what I've heard, I wouldn't touch this company with a bargepole.

The IMS states that it has continued to make significant improvements to customer experience, although my general perception is that TALK is patchy in that respect. It's a bit on-again and off-again.

With YouView, you can catch up on missed telly programmes, and view them on your TV. You need broadband and a set-top box.

At yesterday's share price of 118.9p, TALK has a market cap of £1.1b, a PER of 8.0, EV/Sales is 0.88, yield is 6.5%, and net debt to EBITDA of 1.9 (438/225). Sector average for PER is 10.8, and EV/Sales of 1.12, so TALK is a little cheaper than its peers. BT has net debt to EBITDA of 1.6 (9505/5886).

Director ownership is high. Charles Dunstone's stake is worth £384m, and another two directors own over £1m each. In May 2011, director Ian West bought £250k worth of shares at 138p, and £153k worth in Feb 2011 at 153p.

No comments: