Don't cry for Charles Dunstone...

Yesterday TalkTalk reported it's results to the City and people were not happy with what they were telling them.

The once wonder of the telecoms industry is turning into his idol Richard Branson, but not in the way he dreamed. It's only a question of time when TalkTalk is no more rather than one of if.

Dunstone has built his fortune on the spin that with him you get the best price be it Mobile phones, fixed line telephony or broadband like some spiv working the crowd in Romford Market. The problem with TalkTalk is that the customers are now not prepared to pay the actual cost of delivering fibre broadband and having seen an exodus of customers because of poor service and hacking it has had to offer contracts at below cost to keep the numbers respectable.  The perfect storm has also seen it now having to fix the holes in its finances with a cash injection almost equal to 12 months income.

Since the days of FreeServe I have said that the issue with UK Broadband investment that needed to be addressed was that the Retail Price never reflected the cost of the service or offered a Return on Investment that justified major spending. The TalkTalk partners in a project to bring superfast fibre to York have got their fingers burned from working with Dunstone to the extent that don't wish to undertake anymore work with him.  Dunstone thinks that because he has a large customer base someone else will provide the money. that might have worked 20 years ago but not today.

As others invest in the building of Superfast Broadband Dunstone will be on the sidelines shouting that its a rigged market and BT has failed to invest in Wholesale services that would allow him to stay in business. TalkTalk's strategy in terms of maintaining it's customer numbers means that he will invest in marketing and promotions at the expense of infrastructure and customer service which means that he will have difficulty in get those customers to pay more. Thus we are looking at decline to the point of bankruptcy nobody will buy them out of the hole they have dug for themselves.