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UK ISP TalkTalk Could be Close to Selling their Off-Net Customers

Saturday, November 15th, 2014 (2:01 am) - Score 2,642

New information suggests that broadband and phone provider TalkTalk could be close to off-loading some or all of their off-net customers to another ISP (i.e. those based off BT’s network rather than their own unbundled / LLU platform), although no deal has yet been officially signed.

Back in the spring TalkTalk proposed that one of several ways to “unlock further significant savings” over the next couple of years would be for them to sell their less lucrative off-net subscribers (here). At present the ISPs off-net base comprises 116,000 broadband (BT IPStream) and 242,000 phone subscribers, with related customers delivering an Average Revenue Per User (ARPU) of just £20.01 (well below the £26.54 for on-net).

In TalkTalk’s mind customers on their off-net base aren’t getting a good deal (most of them are on tariffs from legacy brands like Tiscali and AOL) and the ISP probably doesn’t see it as being terribly cost effective to keep them. Plus their broadband adds would look a lot stronger without the churn from off-net casting a constant shadow.

But since May 2014 there haven’t been any new developments, until one of our usually reliable industry sources got in touch to say that a potential buyer had been spotted flying over the off-net base. According to the source, TalkTalk’s recent move to purchase around 100K of Virgin Media’s older ADSL subscribers might have been just the kick needed to make a final deal possible (here).

One reason for this is because the Virgin National (Virgin.net) base can be largely converted to lower cost unbundled lines and many may also be pushed onto FTTC, which would help to mask the sudden loss if a similar amount of TalkTalk’s off-net base were to suddenly be sold (TalkTalk would prefer not to dip below the 4 million subscribers mark).

Officially TalkTalk said they didn’t have anything to say and that’s unlikely to change until a deal is formally signed. In terms of a buyer, we don’t have an answer for that one, although BT / PlusNet, EE, Sky Broadband or possibly even Vodafone all seem like potential candidates (note: Sky might be struggling with a similar off-net dilemma to TalkTalk). Naturally we have asked around and predictably everybody has so far dodged the question.

According to an earlier report from STL Partners, TalkTalk’s off-net subscribers are valued at less than £10m and that may also open them up to interest from medium sized ISPs like Zen Internet (although we admit this seems unlikely given Zen’s premium/business focus vs TalkTalk’s low-cost angle).

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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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