Energy Supplier First Utility to Launch UK Home Broadband Service

Independent energy supplier First Utility has quietly revealed that they plan to mirror rival SSE by launching their own fixed line home broadband and phone service this month, which should help to boost customer retention.

First Utility is a fairly young energy supplier, albeit one that has grown rapidly from 250,000 UK households in 2013 to nearly 1 million today. Most recently the operator has also expanded into Germany and they were even considering an Initial Public Offering (float on the stock market), but this idea has now been shelved due to the uncertainty around Brexit.

Never the less it appears as if the operator now plans to join the already crowded market for consumer broadband services. The new products will be built around a wholesale agreement with TalkTalk, which means that we can probably expect the usual mix of unlimited ‘up to’ 17Mbps (ADSL2+) and ‘up to’ 38-76Mbps (Fibre / FTTC) based broadband bundles.

However it’s very important not to confuse the service provided via TalkTalk’s Wholesale network with that of TalkTalk’s own retail offers to consumers. The two can be very different, depending upon how First Utility chooses to balance their service.

Darren Braham, CFO of First Utility, said (Reuters):

“We will launch broadband later this month in partnership with Talk Talk. It’s a wholesale agreement where we’re using their network to provide broadband services to our customers.”

In keeping with the objective to “diversify its business operations“, First Utility has also reshuffled their board with the appointment of a new Chairman. Current Chair Dr John Roberts is stepping down after 3 years to hand over to Thomas Chambers, Independent Non-Executive Director at First Utility and Chair of its Audit Committee. Pieter Knook and Eva Eisenschimmel, both Independent Non-Executive Directors, will also step down.

At this point First Utility isn’t big enough to threaten the big broadband players, but then their approach is more likely to be focused upon retaining existing customers rather than attracting new ones. As a result we’d expect a batch of packages that are exclusive to their existing energy subscribers, possibly positioned at a very attractive price point.

However we’d caution against locking yourselves into complicated bundles because it may make it harder to switch suppliers later on, which is normally a fairly easy way to save money in the energy market (unlike broadband, where switching is more of a risk and could also result in a worse quality of service or other problems).

UPDATE:

We should add that First Utility has been quietly running an ADSL based broadband service for the best part of a year (here), but this hasn’t been widely promoted and the new products should mark something much more official.