Are TalkTalk about to go walk walk?

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  • Shares in TalkTalk have closed down by nearly 10% after the firm warned that profits would be significantly lower this year than previously thought.

    TalkTalk also slashed its dividend and announced plans to raise £200m by selling shares on the stock exchange.

    TalkTalk took a very different direction to Sky, BT and Virgin Media by concentrating on the bargain basement part of the market and selling broadband packages for as cheap as they can, but is this strategy about to bite them on the bum?

    TalkTalk has no consumer network of its own, it's reliant on BT Openreach's copper wires to reach into its customer homes, it does though have a nationwide fibre network for back-haul and it announced today more investment in that, but how can they invest when they are losing money?

    Like BT, TalkTalk's tv service mainly relies on Freeview to supply the bulk of its tv channels with some extra channels being pumped down the telephone line aka IPTV. It currently has just over a million pay tv subscribers putting it just ahead of BT's service, but way behind VM's and Sky's services with 3.7m and 10.8m subscribers respectively.

    Broadband is where TalkTalk has been strong. It has 4m customers, but still behind VM's 5m and way behind Sky's 6m and BT's 9m customers. Vodafone has under half a million broadband customers, so there is a clear opportunity for Vodafone to expand its customer base at relatively little cost to itself.

    Over the last three years, TalkTalk's share price has nose dived from a high of £4 to around £1 today and during the same time, the company has gone through four finance directors. Is this company finished, or will it find its feet again at some point?

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