LONDON — Shares in telecoms firm TalkTalk plummeted on Wednesday morning after the company cut its dividend as part of a cost-cutting programme designed to boost growth in the business.
The company’s total dividend will be lowered from 15.87 pence at the end of the 2016 financial year to 10.29 pence per share this year.
TalkTalk made the announcement as part of its full-year results for the 2017 financial year, the first under new chief executive Tristia Harrison, who is replacing long-serving boss Dido Harding. Harding is serving her final day at the company on Wednesday
“My focus for the company is growth, cash generation and profit – in that order. We will be smart about how we invest, focusing on our fixed network, avoiding other capital intensive distractions,” Charles Dunstone, the group’s new executive chairman said.
“In light of these new priorities, we have also decided to reset the dividend as we look to deliver growth and strong sustainable shareholder returns over the long term.”
Needless to say, investors in TalkTalk did not welcome the news, selling shares aggressively at the open, and sending them as much as 17% lower. By 8.25 a.m. BST (3.25 a.m. ET) the stock has bounced a little but remains close to 10% down from its opening price at £1.6550 each. Here is the chart:
Aside from cutting its dividend, TalkTalk posted a mixed set of results, with EBITDA rising 17% to £304 million, but total revenues falling 3% from £1.84 billion in 2016 to £1.78 billion in 2017.
“The last 12 months have seen the business lay down solid foundations from which to drive sustainable base and revenue growth in both our Retail and B2B businesses,” incoming CEO Harrison said.
“This will allow us to build upon our core strength as a value for money fixed line connectivity provider as we focus on delivering growth, improving our customers’ experience, investing in and future-proofing our fixed network, and driving operational efficiencies across the business, whilst being more disciplined and smarter with our assets.”