UK multiplay operator TalkTalk scrapped plans to build its own UK mobile network utilising home hotspots, in favour of maintaining its current MVNO agreement with Telefonica’s O2.
In the company’s earnings statement, executive chairman Charles Dunstone said the company would take a one-off hit of £49 million to quit development of the project.
Its plans, announced in 2014, would have seen the service provider build a network focused on offloading traffic onto customers’ home broadband wherever possible.
In areas with a high concentration of customers, this would have created significant network availability and reduce reliance on infrastructure from its host MVNO network.
The plan faced several delays before becoming one of the first casualties of Dunstone, who is expected to shake-up the company after taking a more hands-on role following the departure of long-term CEO Dido Harding earlier this month.
In a statement, TalkTalk said its mobile strategy was being reviewed to create an “alternative less capital intensive offering.”
“As part of our review of how we allocate capital and our clear focus on investing in fixed connectivity we have reassessed our mobile strategy. While we remain committed to offering all our customers a compelling mobile proposition, we have decided not to pursue an inside-out mobile network strategy, and instead we will continue to work closely with Telefonica UK on the right platform and customer offering.”
TalkTalk, which offers fixed, broadband, TV, and mobile services in the UK – mostly sold as bundles – recorded a net growth of 45,000 mobile subscribers in its fiscal Q4, ended 31 March.
By the end of its financial year connection numbers for its MVNO had reached 913,000, up 214,000 on numbers reported in March 2016.
Overall, TalkTalk generated a £133 million pre-tax profit in its recent fiscal year, up from £107 million in the 12 months to end-March 2016, when earnings were impacted by a major hacking attack the company suffered during the period.
TalkTalk warned earnings in its current fiscal year will be lower than the recent 12 month period, as it invests to attract new customers.