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SKY Sale Triggers Exodus of O2 UK Home Broadband Subscribers

Wednesday, May 8th, 2013 (10:10 am) - Score 2,450
o2 uk

The latest quarterly results from O2 UK (BE Broadband) appear to suggest that the ISPs fixed line home broadband customers have been climbing over themselves to escape the forthcoming migration to Sky Broadband (BSkyB) as subscriber figures fell by a staggering -40,700 in Q1-2013 to total 519,400.

Sky picked up O2’s home broadband and phone customers for £180m in March (here), which was in addition to an extra contingent amount of not more than £20 million that may be payable dependent upon the successful delivery and completion of the customer migration process (this is now becoming more of a challenge).

The deal officially completed at the start of this month and migrations are expected to begin in the autumn (here). Clearly many customers have been angered by the move, so much so that significant retention offers of 12 months free broadband and huge mobile call rebates have not been enough to keep them in one place.

History of O2s Fixed Line Broadband Decline
December 2010 – 671,600 (largest peak)
March 2011 – 669,200
June 2011 – 652,900
September 2011 – 625,300
December 2011 – 620,300 (-5,000)
March 2012 – 617,800 (-2,500)
June 2012 – 602,000 (-15,800)
September 2012 – 579,500 (-22,500)
December 2012 – 560,100 (-19,400)
March 2013 – 519,400 (-40,700)

But it’s not all bad news as O2/BE’s fixed line phone business still saw its subscribers increase to 384,500 (up +7,100 during Q1-2013), although this represents a significantly slower growth than the +14,600 added during Q4-2012 and the +24,000 in Q3-2012.

O2 (Telefonica UK) Statement

Revenues totalled 1,605 million euros in the three months to March 2013 (-4.8% year on year). Excluding the impact from mobile termination rate cuts and roaming regulation, revenues would have decreased 1.0% year-on-year (+0.5% year-on-year in the fourth quarter of 2012). OIBDA totalled 338 million euros in the first quarter (+3.1% year-on-year), back to growth driven by an increasing customer base leading to improved service revenue trends, lower commercial costs due to lower upgrade activity and a successful execution of efficiency measures across the business.

CapEx declined 11.8% year-on-year excluding spectrum acquisition in the first quarter as the Company executes on the mobile network sharing agreement. Telefónica has successfully secured two blocks of 10 Mhz in the 800 Hz spectrum band for a total investment of 671 million euros, ensuring the best spectrum to deploy LTE services.”

O2 also confirmed that the Sky acquisition would “not have any impact on financials” till the second quarter of this year. Meanwhile its future focus is now firmly fixed on investment and development of the new 4G mobile services.

Leave a Comment
3 Responses
  1. Avatar Flakey

    In the world of high finance/big business the last consideration is always the customer and so it has been with this deal between Sky and O2 and O2 customers are showing exactly what they think of the deal by voting with their feet. As an O2 customer I intend to migrate as soon as my contract with O2 is over and why? because (1) there was no consideration and no consultation with the customer. I know it isnt a pre-requisite but at the end of the day its the customers that have made O2 broadband what it is and (2) Sky naturally (and arrogantly) assumed that all O2’s customers would migrate to their network and thanks to the £20million sweetener we all know why now.
    Nowhere on either O2’s or Sky’s site is there any reference to migration and when I recently contacted Ofcom with regard to no penalty contract terminations, they basically washed their hands of the matter stating that thats for O2 and Sky to work out.
    O2 customers have been sold down the river and both companies deserve whatever they get.

    • Avatar Kyle

      Some would argue that it’s the customers that have made O2 what it isn’t… read the reviews out there. And not just O2, but BE also. They’ve failed to even adopt any form of FTTx service after many failed promises.

      Also, I don’t believe that Sky were arrogant in not believing that there would be attrition. That’s only natural. However, the investment they’ve made demonstrates their ability to take those customers who wish to stay, forward with the adoption to ‘superfast’ services. In its current iteration, O2/BE were just not willing to. This is clearly shown in their lack of product offerings in this area.

      I am in no way a defender of Sky, but it was clear for all to see that O2 was stagnant and merely treading water. Sky offered them a lifeline and they took it.

  2. Avatar Gareth

    I agree with @Kyle. O2/Be has been in a stale state for years. I left BE in 2010 and joined Sky Broadband and have never looked back. The service is first class and the price is low AND at the end of last year I got a call from Sky to say my cabinet had now got fibre.

    I am now on unlimited fibre for £20 per month, line running at near full speed with no peak time reductions.

    Would have still been paying BE top dollar for an out of date service. No thank you!

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