UK broadband and calls supplier TalkTalk (TALK) continues to plug away at its growth ambitions in a steady as she goes kind of way. Today's first quarter trading update contains nothing to blow you away but offers signs that it might continue recent progress. Remember, the shares have more than doubled since starting 2012 at 135p (see chart), the stock pretty much flat today at 317p.

TalkTalk reports revenue of £434 million for the three months ended June 2014. According to analysts at Credit Suisse, that's in-line with the investment bank and consensus, and represents revenue growth of 3.1%, the 'sixth consecutive quarter of year-on-year growth,' the analysts point out.


You can read the full details for yourselves, to summerise, there's more broadband and calls customers, and its Freeview-based TV service continues to act as something of a flag carrier for the group, adding 185,000 new sign-ups during the period.

JP Morgan analysts look to the shares' valuation, highlighting a beefy price to earnings (PE) multiple of 23 for this year, to March 2015, falling to 14-times next year, way above the UK telco sector's 15 for the current year.

'However, by fiscal March 2017 the shares trade on a 11 PE,' JP Morgan adds.

That seems an awfully long way into the future to be looking for an attractive valuation, and a lot can change before then, not least the live football screening rights backcloth. Rival BT (BT.A) has already made its aggressive intentions clear, getting in on some English Premier League games and nabbing exclusive coverage of all European club games from 2015, a blow to British Sky Broadcasting (BSY) (Sky) of Champion's League proportions whatever Sky executives might say.

Next up will come the screening landgrab for English Premier League games for the for the three-year period starting in August 2016. That auction is likely to take place in January and if BT bids aggressively again (as expected), TalkTalk's expanded content deal with Sky, also announced today, could prove a lame duck.

This hits to the heart of TalkTalk's medium and long-term plans, that it has no TV to offer customers than cannot be picked up elsewhere. Converging telco and broadcast markets are putting content at the crucible of customer choice, and regardless of BT and Sky's next moves in the market (and let's not forget Virgin also), TalkTalk continues to look like being out-thought and out-funded.

Issue Date: 23 Jul 2014