UK ISPs O2 and BE Broadband Stem Subscriber Decline at 620,300

Mobile operator and ISP O2 UK (Telefonica) has released its latest quarterly results to the end of December 2011 (Q4-2011), which showed that their rate of fixed line home broadband subscriber decline had significantly slowed from -27,600 in Q3 to -5,000 in Q4 for a new total of 620,300.

O2’s Home Broadband subscriber base has been in decline ever since its last high of 671,600 in December 2010. The latest change represents a pleasing turnaround and gives hope that O2 could potentially return to Home Broadband growth this year. It should be said that O2/BE’s fixed line phone subs continued their strong growth from 182,300 in Q3-2011 to 216,100 in Q4.

Telefonica Statement

In 2011, the UK market remained intensely competitive amidst a challenging economy. Against this backdrop, and after an initial focus on value over volume during the first half, the Company decided to focus on regaining commercial momentum, leveraging the new smartphone tariff structure launched in August and a proactive retention management in the contract segment.

The total access base stood at 23.0 million at the end of 2011, unchanged from 2010, which reflects a flat performance in mobile, as well as positive fixed telephony growth which compensated a marginal year-on-year decline in retail broadband fixed internet accesses.

As a result, 2011 revenues totalled 6,926 million euros, down 2.7% year-on-year. Excluding the impact from mobile termination rate cuts, revenues would have increased 0.3% year-on-year in 2011.

Much will now depend upon O2’s future course. Sibling Be Broadband, which effectively operates O2’s unbundled ( LLU ) broadband platform, has already costed and submitted a vital upgrade plan for approval.

This will allow both ISPs to launch a new generation of ‘up to’ 40-80Mbps superfast broadband services based off FTTC technology. BE and O2 are also busy working on a significant upgrade to their core network, which is not expected to complete until early 2013.

Meanwhile we wouldn’t be surprised to see another decline when O2’s next Q1-2012 results surface. The recent chaos with packet loss, latency and website access problems (here), which took time to resolve (it still doesn’t seem to be completely fixed for everybody), caused frustration for a lot of customers.