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TalkTalk completes first stage of IT consolidation programme

TalkTalk completes first stage of IT consolidation programme

Tiscali integration also finished, generating £55 million cost-savings

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TalkTalk has finished the employee consultation phase of an IT consolidation programme that it plans to complete by the end of the year.

The company’s latest financial results also reveal that it has completed the Tiscali integration programme.

The telecommunications company announced in January that it would be centralising its IT services and consolidating back office functions, which involved a cull of 580 jobs, to address duplication of functions caused by its acquisitions during the past five years. TalkTalk acquired AOL Broadband in 2006 and Tiscali UK in 2009.

“The employee consultation processes were completed on schedule and the new organisation was introduced just after the year-end,” the company said in its preliminary financial results report for the 12 months to 31 March 2011.

This is the first full-year report for the company since its demerger from The Carphone Warehouse, in which it revealed pre-tax profits of £57 million, up from £11 million in 2010. 

TalkTalk expects the restructuring programme to generate cost savings of around £25 million, particularly through a reduction in customer service costs.

“These changes will significantly improve the quality of the end-to-end experience we deliver to our customers, which will enable us to address customer services issues and also start to reduce our overall customer service costs.

“We are already seeing lower customer call volumes in some areas as a result of improvements we have made in certain customer processes, such as enabling customers to better manage their accounts online,” the company said.

TalkTalk also said in its results that it had completed the integration of the former Tiscali business into the company and achieved its target of £55 million cost savings.

It said that the “complex” integration process included moving all former Tiscali customers onto the TalkTalk email platform and moving their billing details onto TalkTalk’s upgraded billing system. The AOL customer base was also moved onto the TalkTalk network and billing system during the year.

“We therefore ended the year with 86% of our broadband customers on our own network, and substantially all of our customers on our own billing and customer management systems. This gives us a strong, integrated platform from which to drive our new strategy forward,” TalkTalk said.

Its new strategy includes expansion of data services for businesses as well simplifying operating systems and processes in order to increase efficiency.

While helping to eliminate duplicated costs, the integration programme also incurred some costs, for example, the company incurred a charge of £7 million, which related partly to redundant software.

In addition, the Tiscali integration work caused a highly-publicised disruption to customers, which the company says has led to higher levels of complaints and churn among broadband customers.

“We have worked hard to mitigate the impact of this disruption, and we are confident that we are now making major progress in improving the experience for our customers, which will lead to lower churn,” Dido Harding, chief executive of TalkTalk, said.

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