TalkTalk Telecom lost a higher-than-expected 43,000 customers in the second quarter as it struggled to shed its reputation for poor customer service, leading it to downgrade its revenue forecast for the year.

Chief Executive Dido Harding said the group was taking steps to improve its customer service and was seeing fewer complaints, but it would take longer to change customer perceptions.

It is taking longer for us to translate improvements in customer service into positive growth, she told reporters on Tuesday.

Regulator Ofcom slapped a record 3 million pound fine on the group in August for sending out the wrong bills to customers.

The company, which competes with BT and Virgin Media , said its revenue was stabilising, but it now expected no uplift in the second half from the first, when revenue fell 5 percent to 844 million pounds.

It had previously forecast a recovery in the second-half, both in revenue and levels of churn.

Harding said she was expecting TalkTalk to return to customer growth sometime between January and June 2012. The company had said it would be adding customers by the end of 2011.

TalkTalk's larger rival BT maintained its strong growth in retail broadband in the second quarter, when it added 166,000 new customers.

However, the group which sponsors ITV's Saturday night ratings hit 'The X Factor', said its strategy to move its customers onto its own more-profitable network was helping its bottom line. It switched 83,000 customers in the quarter.

It reported a 20 percent rise in first-half core earnings to 146 million pounds, and said its earnings per share for the year would be at the top of its 15.5 pence to 16.5 pence target range.

Shares in the group, which have fallen 20 percent since January 1, were 2.4 percent lower at 125.4 pence by 10:47 a.m.

Analysts at Espirito Santo Investment Bank said the broadband net losses were almost twice as bad as it was expecting.

In our view the reputational damage from numerous reports of TalkTalk's poor customer service is having a negative impact on churn and will take a long time to repair, they said.

We believe TalkTalk's deteriorating market position means both its medium term 20 percent EBITDA margin target may also be at risk as the company will have to invest more than expected in subscriber retention and acquisition.

(Editing by Jane Merriman and Jon Loades-Carter)