Broker snap: YouView an opportunity for TalkTalk

17th Sep 2010 13:00

The recently renamed YouView, previously known as Project Canvas, offers an opportunity for internet service provider TalkTalk to crank up its average revenue per user, Daniel Stewart believes.The Project Canvas consortium, comprising Arqiva, the BBC, BT, Channel 4, Five, ITV and TalkTalk has confirmed that the new set-top based service will launch next year, much to the annoyance of BritishSkyBroadcasting and Virgin Media, which regards the whole enterprise as anti-competitive.The service, which will combine Freeview channels with web-based and video on demand programmes, gives TalkTalk the chance to increase its current average revenue per user (ARPU), estimated at £23.95."TalkTalk has concentrated on providing a cost-effective, plain vanilla broadband service to its 4.24m subscribers (24%E of the UK residential broadband total), and is currently assimilating its acquired Tiscali UK broadband subscriber base," notes Daniel Stewart analyst Mike Jeremy. Looking at the experience of French operator Iliad, however, Jeremy thinks TalkTalk should be able to squeeze more money out of its customers once YouView launches."Iliad's quad-play offering has enabled it to raise its €29.99 base price ARPU towards €36 (£31.30), 31% above TalkTalk's. Our price target, 180p, is at the top end of a range of positive market ratings from 160p upwards, and is based on the expectation that TalkTalk will offer YouView services as a means of boosting ARPU," the broker said.