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Talktalk Telecom Group Limited Annual Report 2021 1 STRATEGIC REPORT Our Business Model

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Talktalk Telecom Group Limited Annual Report 2021 1 STRATEGIC REPORT Our Business Model TalkTalk Telecom Group Limited 2021 Annual Report 2021 Annual Limited Group Telecom TalkTalk 2021 ANNUAL REPORT TalkTalk Telecom Group Limited (formerly TalkTalk Telecom Group PLC) At a glance Contents Strategic report IFC At a glance 2 Our business model 4 Our strategy 6 Key performance indicators 8 Business and financial review 13 Principal risks and uncertainties HQ 18 Section 172 Salford, Greater 24 Regulatory environment Manchester 26 Corporate social responsibility Corporate governance 30 Corporate governance 35 Audit Committee report 38 Directors’ remuneration report 53 Directors’ report 55 Directors’ responsibility statement 47,300 Financial statements Over 3,000 high-speed unbundled 56 Independent auditor’s report Ethernet 66 Consolidated income statement exchanges 67 Consolidated balance sheet connections 68 Consolidated cash flow statement 69 Consolidated statement of changes in equity 70 Notes to the consolidated financial statements 108 Company balance sheet 109 Company cash flow statement 110 Company statement of changes in equity 111 Notes to the Company financial statements Other information UK’s 116 Five year record (unaudited) 96% largest 117 Alternative performance measures population wholesale 118 Glossary coverage broadband 120 Registered office 120 Advisers provider Over 957 million GB average 4 million customer broadband downloads per customers month Stay up to date at www.talktalkgroup.com 2,019 2.8 million employees FTTC and FTTP (as at 28 customers February 2021) WHO WE ARE TalkTalk is the UK’s leading value for money connectivity provider. We believe that simple, affordable, reliable and fair connectivity should be available to everyone. Since entering the market in the early 2000s, we have a proud history as an innovative challenger brand ensuring customers benefit from more choice, affordable prices and better services. Today, we provide Fibre, broadband, landline, TV and mobile services to over four million customers. We serve our residential customers through the TalkTalk brand, our business customers through TalkTalk Business, whilst also wholesaling to resellers via TalkTalk Wholesale Services. Our fixed line network currently covers approximately 96% of UK homes, with unbundling equipment (such as digital subscriber line access multiplexers, multi-service access nodes and Ethernet switches) installed in over 3,000 exchanges, which is the largest such deployment in the UK. As we look forward, we are well positioned to benefit from the roll-out of Full Fibre (Fibre to the Premises or FTTP) across the UK as network builders seek immediate access to high volumes of customers to support their investment. We therefore expect to be able to negotiate wholesale terms which enable us to cost effectively migrate our new and existing customers at pace to higher bandwidth and more reliable connectivity products. On 15 March 2021 TalkTalk was officially de-listed from the London Stock Exchange, following the acquisition of the Company by Tosca IOM Limited, pursuant to a Scheme of Arrangement that became effective on 12 March 2021 (the “Public to Private Transaction”). As a consequence of the transaction the Group re-registered from a public company called TalkTalk Telecom Group PLC to a private company called TalkTalk Telecom Group Limited. For more information see the case study on the transaction on pages 22 and 23. WHAT WE DO Fibre Broadband Fixed line voice Data products TV Mobile We offer both residential We continue to provide We continue to offer We offer data solutions TalkTalk TV lets our Our simple and and Business customers standard broadband fixed line Voice to Business customers residential customers compelling proposition access to faster, more connectivity (ADSL) for connectivity to at great value through choose their perfect allows residential reliable Fibre broadband, those customers who residential and Business our high bandwidth TV package through the customers to access predominantly provided do not yet require the customers. In addition Ethernet-based YouView platform – unique offers in via our Fibre to the increased download to this we offer great connectivity services. with over 100 Freeview partnership with O2. Cabinet (FTTC) network. speeds offered by a value boosts, such as Within our product channels – as well as Increasingly we are Fibre connection. unlimited UK calls and portfolio we are flexible access to an connecting customers calling packages which seeing a clear shift to extensive range of to next generation FTTP give customers the businesses demanding premium content from networks through ability to save money higher capacity Sky and BT Sport, as wholesale agreements on items such as gigabit services. well as over the top with Openreach, international calls. (OTT) services from CityFibre and other Netflix, Now TV and alternative networks Amazon Prime Video. (“altnets”). OUR CUSTOMERS Consumer (B2C) Business (B2B) Our Consumer business provides affordable, Our business arm, TalkTalk Business, is one of reliable fixed line connectivity through the the largest B2B telecommunication services TalkTalk brand to residential customers. providers in the UK. Broadband is at the core of our proposition and is offered at varying We offer a wide range of data connectivity and next generation bandwidths, with 80% of the Consumer base now taking a Fibre voice products to businesses throughout the country, including fixed product. At present the vast majority of these are FTTC connections, line telephony, broadband internet (including high-speed Ethernet), but increasingly we are migrating customers to FTTP services as and data networking and other connectivity solutions. These services when they are available. are offered to private companies and public sector organisations, both directly and on a wholesale basis through nearly 1,000 channel In addition to the core Fibre broadband products, we offer sensibly partners. Through these partners, we are the UK’s largest provider of priced and revenue enhancing TV and fixed line telephony add-ons. wholesale broadband to small businesses and consumers, with over In particular, our TalkTalk TV add-ons provide flexible access to varied 50% market share. free and pay-to-view third party content through the YouView platform. We also offer residential customers an option to subscribe to O2’s We plan to further leverage our existing wholesale platform and mobile services through our reseller agreement with them. successful wholesale relationships to serve a broad range of potential new customers, who can benefit from our scale and capability, We are a value-centric business and always endeavour to save our enabling us to enhance our propositions and drive financial benefits. customers money versus our competitors with affordable and fair prices, as well as the ability for customers to fix their price throughout their contract term. TalkTalk Telecom Group Limited Annual Report 2021 1 STRATEGIC REPORT Our business model OUR MODEL FOR SUSTAINABLE GROWTH INPUTS OUTPUTS Large and stable Affordable and customer base reliable products Consumer o aging ur net Growing demand ver wo Effortless for low cost fixed Le rk customer provider of fixed connectivity fixed of provider connectivity everyone for fair connectivity experience To be the number one value be the number one value To Our purpose reliable, Simple, affordable, Simple, affordable, reliable, Purpose Our Our Mission Our Significant fair fixed connectivity Government for everyone Fibre for everyone support for Fibre Our mission expansion To be the only affordable scale Full Fibre provider for consumers and businesses across the UK Strong brand Shareholder value recognition Partnerships with B2B Fibre network providers Read more about our services on page 1 Dedicated and talented employees HOW WE ARE CONNECTED Owned equipment Last mile supplied in 3,000+ exchanges by BT Openreach KEY and other altnet FTTP providers Price-regulated copper and Ethernet Ethernet Fibre partially regulated Fibre to the Cabinet (FTTC) Core optical network Fibre to the Premises (FTTP) Two separate national networks supporting 9.6Tbps of capacity Home and business Street cabinet Last mile TalkTalk Telecom Group Limited Annual Report 2021 2 WHO WE DELIVER FOR People Our colleagues are our biggest asset and strength. Our workforce is knowledgeable, committed, collaborative and productive. Selected in ‘Inclusive Top 50 UK Employers List’ Customers Community It is vital that we engage with our customers to ensure we continue to We value our communities and are committed to doing business the provide great products and services that meet their changing needs. right way. We have a responsibility to ensure that we are contributing to society. Over 4 million customers Over £4m raised for Ambitious about Autism since 2006 Regulators Shareholders Regulation is vital to the success of our business, both by holding us to Our shareholders are the providers of capital, and continued access account for our actions and for holding our suppliers to account for their to capital is of vital importance to the long term success of our business. actions, whilst determining fair pricing. New shareholder structure post Public Regulatory environment allows altnet ecosystem to Private Transaction to flourish giving customers more choice Government Suppliers Digital infrastructure is a Government priority with a focus on Our suppliers are fundamental to the quality of our products ensuring nationwide access to gigabit capable broadband and services.
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