TalkTalk Shares Rise as Founder Charlie Dunstone Takes Over After CEO Dido Harding Resigns

Charles Dunstone 2012
Then Carphone Warehouse Chairman Charles Dunstone speaks at the CBI annual conference in London November 19, 2012. Dunstone, who founded Talktalk will run the company after CEO resigns. Suzanne Plunkett/REUTERS

TalkTalk founder and chairman Charles Dunstone will take over the running of the telecoms operator when chief executive Dido Harding steps down in May after seven years in charge, the company said on Wednesday.

Harding's departure came as TalkTalk reported a 5 percent drop in revenue and said it had lost a net 42,000 broadband subscribers in its third quarter, but kept its forecast for its full year earnings unchanged.

Shares in TalkTalk, which competes with Sky and Virgin Media as well as industry leader BT, were trading up 7 percent at 167 pence at 8.26 a.m. GMT.

The company was dogged for years by a reputation for poor customer service, largely as a result of merging several companies. Its shares have fallen 23 percent in the last 12 months after a high-profile cyber attack in October 2015.

"I've always been a firm believer that CEOs should not overstay their welcome," Harding, who will be replaced as CEO by company insider Tristia Harrison, said.

Dunstone, who created TalkTalk in 2003 as an offshoot of his Carphone Warehouse group, will take on executive duties following the exit of Harding, who he appointed when he separately listed the telecoms firm in 2010.

The 52-year-old sailing enthusiast, who owns a 31 percent stake in TalkTalk worth about £500 million, said he would support the new management team by taking an executive role as well as chairing the board.

Doing both jobs is not considered corporate best practice.

"There are very, very strong successors within the business, but they don't have the experience of running a public company and the investors relations and all that kind of stuff, so I said I'll become executive chairman and support them in that role," he said in an interview.

In a related move, Dunstone will step down as chairman of Dixons Carphone and will be replaced by former BT chief executive Ian Livingston.

Harding, a consistent thorn in the side of BT, said she would focus more on public service, including her role in the upper house of the British parliament.

The 49-year-old, a member of the Jockey Club whose horse Cool Dawn won the Cheltenham Gold Cup in 1998, was a contemporary of former prime minister David Cameron at Oxford, and sits on the Conservative benches in the Lords.

TalkTalk relaunched its packages last year, aiming to offer simpler deals to all of its customers and re-establish its credentials as a value provider.

As a result of its new tariffs, it said churn, or the number of customers leaving, had risen, while revenue has been hit by the re-pricing of its offering.

Group revenue fell 5 percent to 459 million pounds ($577 million) in the quarter, with revenue on its own network down 5.4 percent to 332 million pounds.

However, it said the effect of the changes would be short-lived, and earnings for the year would be towards the bottom of a £320 million to £360 million range.