TalkTalk Group PLC – Q3 Trading Update – 31 January 2020 1

31 January 2020

TalkTalkQ3 Trading Update

TalkTalk Group PLC – Q3 Trading Update – 31 January 2020 2

• Strong Fibre net adds at 148k (Q3 FY19: 146k) and YTD fibre net adds of 440k (Q3 FY19 YTD: 338k)

• Increasing number of new and existing customers in Consumer and B2B taking Fibre products

• Solid growth in the Ethernet base of 1.7k (Q3 FY19: 1.1k), with over a third of orders for the 1Gb product

• Revenue broadly flat year on year (despite industry-wide Voice decline and a modestly declining Copper base), with improvements quarter on quarter

Q3 trading; continued outperformance on Fibre and Ethernet net adds

TalkTalk Group PLC – Q3 Trading Update – 31 January 2020 3

• Move to new HQ in Soapworks in Salford and the move out of London is complete and has gone exactly to plan

• Savings in line with plan

o £16m-£20m in FY20

o Annualised savings of £25m-£30m

• Fantastic new talent

• Benefits of single site

Cost reduction plans on track; HQ move to Salford complete

TalkTalk Group PLC – Q3 Trading Update – 31 January 2020 4

• Our plan is on track

• We expect to see good full year growth in Headline EBITDA

• Post-sale of FibreNation, we expect net debt/EBITDA ratio (pre-IFRS 16) to be towards 2.5x by year end

• Expect further de-leveraging in FY21

FY20 EBITDA outlook remains unchanged

TalkTalk Group PLC – Interim Results FY20, 15th November 2019 5

• Agreed to sell FibreNation to CityFibre £200m, subject to Shareholder approval, with completion expected at some point in March

• Sale represents an excellent return on investment (over 3 times)

• Sale underpinned by long-term, competitive wholesale agreement giving access to a superior full fibre product at market leading pricing

• Proceeds of the sale will be used to strengthen the Group’s balance sheet

• Establish a Northern Centre of Excellence and accelerate the next generation of digital infrastructure throughout the North of England and beyond

• Will enable a real acceleration in roll-out, which is fundamental to a thriving competitive market

TalkTalk sells FibreNation to CityFibre for £200m

TalkTalk Group PLC – Interim Results FY20, 15th November 2019 6

TalkTalk and CityFibre• Multi-year agreement locking in highly competitive wholesale price for 1GB access

• Where CityFibre successfully roll-out, we will connect and commit exclusively

• We have full flexibility to connect homes to BT Openreach, or other alternative builders, in areas before CityFibre arrives

• Given the competitive pricing and combined skills of FibreNation and CityFibre, we are confident that the roll-out will be successful, and it is our absolute intention to partner with CityFibre where they build

TalkTalk and BT Openreach• Technical and operational work for migrating customers to FTTP on a national scale is well

underway

• Already connecting customers to the BT Openreach FTTP product and this will accelerate over the coming months

• Discussions regarding a national FTTP wholesale agreement are progressing

• We are willing to commit meaningful volumes of customers nationwide in return for competitive pricing and attractive terms to incentivise migration

TalkTalk’s Full Fibre future

TalkTalk Group PLC – Q3 Trading Update – 31 January 2020 7

• Doing exactly what we said we would

• Simplification is translating to improved KPIs, outperformance in Fibre take-up, lower costs and a far more stable footing

• The outlook is positive

o Structural price advantage and strong market position

o Bolstered balance sheet

o Competitive wholesale pricing

o Perfectly placed to drive scale migration to full fibre and ultimately enable full copper switch off across the UK

Summary

TalkTalk Group PLC – Q3 Trading Update – 31 January 2020 8

Q&A