ISP O2 UK Suffers Sharp Decline to 602000 Broadband Subscribers

Mobile operator and ISP O2 UK (BE Broadband) has released its latest results to 30th June (Q2), which revealed that their fixed line broadband subscriber base saw a shock fall to total 602,000 (-15,800 in the quarter). That’s a nosedive from the -2,500 lost in Q1-2012 and the -5,000 lost during Q4-2011.

The situation could perhaps be said to reflect a combination of factors, such as the well reported quality issues that occurred during the Spring months (here), price hikes, a delayed roll-out of superfast broadband services to 2013 (here) and other seasonal factors (e.g. most ISPs see a fall in growth at this time of year as students move out of their accommodation).

Telefonica Statement (O2 UK)

In the first half of 2012, Telefónica UK regained commercial traction, with improving momentum in the second quarter despite a highly competitive market. Mobile service revenue evolution stabilised for a second consecutive quarter, on the back of contract customer base growth and the strong performance of data revenue. Telefónica UK’s total access base stood at 23.3 million at the end of June 2012 (+2% year-on-year), primarily driven by the strong growth in the contract mobile base and positive fixed telephony growth.

Revenues reached 3,437 million euros in the first half (-5.7% year-on-year), with a modest sequential improvement in the second quarter (-5.3% year-on-year vs. -6.0% in the first quarter), as the result of improving commercial momentum in the market place. In the first half of the year, OIBDA reached 736 million euros (-26.8% year-on-year), with improved margins quarter-on-quarter (23.4% in the second quarter vs. 19.4% in the first quarter), leading to a 21.4% margin in the first half of the year. CapEx to June 2012 reached 375 million euros (+9.5% year-on-year).

Today’s dire results suggest that O2 has effectively wiped out its last two years worth of customer gains and should serve as a reminder of how brutal competition in the wider fixed line ISP market can be, especially for those that fail to keep pace.

As it stands O2’s packages aren’t as attractive as they once were and it hasn’t been advertising them as aggressively as its competition. Customer loyalty will only get you so far.