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SKY Sale Triggers Exodus of O2 UK Home Broadband Subscribers

Wednesday, May 8th, 2013 (10:10 am) - Score 2,452

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.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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