Talk Talk is temporarily cutting its dividend to 2.5p to fund its investment in growth and the roll-out of FTTP (fibre to the premises).
The group said there will be a final dividend of 1.5p in FY18.
FY19 will see an interim dividend of 1.0p and a final dividend of 1.5p. The group intends to return to a normalised dividend of 7.5p when leverage is reduced to 2.0x EBITDA.
The company grew its on-net broadband base by 37,000 in the quarter ended 31 December, with double-digit growth in its retail and wholesale bases.
This is the fourth consecutive quarter of growth in the on-net base and its highest quarterly net adds number since Q4 FY15.
The growth of the in-contract base contributed to improvements in churn, with on-net churn falling to 1.3% during the quarter from 1.6% the previous quarter.
In the TalkTalk Business Ethernet & EFM base, 1,800 new lines were added, taking the total installed base of data connections to 48,000.
Headline group revenues were £388m (excluding Carrier of £20m and Off-Net of £6m), a 1% year-on-year increase.
On-net revenues were flat at £316m.
Corporate revenues grew by 5.9% to £72m driven in the most part by 7.7% growth in Data revenues.
Looking forward to FY19, the group expects growth in headline group revenue, net adds growth consistent with FY18, stabilising ARPU and significant cost reduction. It expects EBITDA growth of 15%.
TalkTalk has agreed heads of terms with Infracapital, the infrastructure equity investment arm of M&G Prudential, for the creation of an independent company with Infracapital funding 80% and TalkTalk 20%. It plans to provide full fibre to more than 3 million homes and businesses in mid-sized towns and cities in the UK.
TalkTalk has also announced a placing of new ordinary shares of 0.1 pence each to raise up to £200 million.
Charles Dunstone, executive chairman of TalkTalk, said: "It's 12 months since I announced my intention to take a more active role in the management of TalkTalk. Since then, we have reset the business and returned it to quarter-on-quarter customer growth.
"By signing heads of terms with Infracapital we are making good progress towards putting TalkTalk at the heart of Britain's fibre future by building a full fibre network, bringing faster, more reliable internet to millions of homes and businesses.
"Looking ahead we see real opportunity to continue growing the core business whilst also investing in full fibre. We have therefore strengthened our balance sheet and temporarily reduced our dividend to take full advantage of the opportunities available.
"We anticipate revenue growth and strong earnings growth in the year ahead, as the benefits of a growing customer base and rigorous cost control begin to deliver the results this business is capable of."