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UK ISP BT Grows to 9.12M Broadband Subs, with 4.26M on Superfast Fibre

Thursday, July 28th, 2016 (7:57 am) - Score 974
BT HQ UK Building Logo

BT has published their latest quarterly results (calendar Q2 2016), which saw their total base of retail broadband customers top 9,117,000 (up by +76K in Q2 vs 1.045m in Q1) and 4,257,000 of those make use of their FTTC/P based Infinity superfast broadband service (up by +181K vs +214k in Q1).

Once again the BT Group have had a busy quarter, starting with their retail ISP division (BT Consumer) that has launched a new ‘up to’ 52Mbps FTTC (BTInfinity) service (here) and introduced the new Smart Hub (HomeHub 6) router (here). Not to mention the on-going work of integrating EE into their business.

Elsewhere Openreach, which is responsible for maintaining and upgrading BT’s national UK telecoms and broadband network, has been busy expanding the availability of their ultrafast Fibre-to-the-Premises (FTTP) technology and preparing for the commercial roll-out of 300Mbps G.fast (here and here).

Key Highlights from Today’s Report (Quarterly)
* BT Groups’ quarterly revenue hit £5,775m (up from £5,656m in Q1 2016)
* BT Group’s reported profits before tax hit £717m (down from £893m)
* BT Group’s total net debt reached £9,579m (down from £9,845m)
* BT Wholesale’s quarterly operating profit hit £123m (up from £91m)
* Openreach’s quarterly operating profit hit £300m (down from £382m)
* Openreach’s quarterly capital expenditure hit £337m (down from £376m)

Now let’s take a closer look at the wider figures.

BT Consumer / Retail

BT’s consumer division is the largest broadband ISP in the UK and as such they also tend to grab the lion’s share of new “fibre broadband” (FTTC/P) subscribers (we split this out below), which takes away from the overall total on Openreach’s wider network (we’ll show this later on).

Broadband Subs TV Subs Mobile Subs + EE
Fibre Subs
Q2 2016 TOTAL
9,117,000 1,620,000 30,268,000 4,257,000
Subs Change (Q2 2016) +76,000 +59,000 -177,000 +181,000
Q1 2016 TOTAL
9,041,000 1,463,000 30,445,000 4,076,000
Subs Change (Q1 2016) +1,045,000 +66,000 -147,000 +214,000

We should point out that the quarterly change in home broadband subscribers was abnormally larger in Q1 (+1.045m) due to the merger with EE, thus it’s perhaps better to compared with the Q4 2015 figure when +130,000 new customers were added. In keeping with that Q2 may have suffered due to Brexit distractions and students returning home for the summer (BT often do special 9 month contracts for students).

In terms of mobile subscriptions, BT + EE actually added +12,000 new customers, but this has to be weighted against the fact that they removed 189,000 “inactive customers” in the quarter and that’s why the growth has suffered such a sharp fall this quarter.

Openreach & Wholesale

The results from Openreach are more useful because they allow us to see wider market trends, at least in respect of BT’s national UK telecoms network and those independent ISPs that buy services over it (e.g. the total broadband and fibre lines below include those from BT Consumer, as well as many other ISPs that buy their lines from Openreach, all combined).

Note: Unbundled (LLU) lines are mostly used by ISPs that have installed some of their own kit inside Openreach’s network in order to gain more control over their own products and services, which is something that providers like TalkTalk and Sky Broadband have invested a lot of money into (MPF lines are more popular because they afford ISPs the most control).

Total UK Broadband Lines
Fully Unbundled MPF Lines
Shared Unbundled SMPF Lines
Fibre Lines (FTTC/P)
Q2 2016 TOTAL
20,003,000 8,934,000 1,067,000 6,239,000
Subs Change (Q2 2016) +95,000 +13,000 +8,000 +333,000
Q1 2016 TOTAL
19,927,000 8,921,000 1,059,000 5,907,000
Subs Change (Q1 2016) +130,000 +47,000 -14,000 +415,000

Separately, BTWholesale continues to operate a total of 885,000 external broadband lines for other ISPs, which has fallen by -2,000 in Q2 2016 after showing a drop of -8,000 in Q1. However it is noted that BT recently conducted a review of their Wholesale and Openreach base, which resulted in a 19,000 adjustment, thus the figures for this quarter are a little out of sync with previous trends.

Otherwise the most interesting figure to take away from Openreach’s summary is the quarterly increase of +333,000 in new “fibre broadband” (FTTC/P) lines, which of course includes the +181,000 added by BT’s Consumer division. In other words, BT’s retail rivals (e.g. Sky, TalkTalk, Zen Internet, AAISP etc.) accounted for just +152,000 of the total quarterly increase (down from +201,000 in the previous quarter).

Gavin Patterson, CEO of BT Group, said:

“We’ve made a good start to the year, with growth in revenue and strong cash flow. We’re on track to deliver our full year outlook.

Our integration of EE is progressing well, alongside our business reorganisation that took effect on 1 April. EE performed strongly, both financially and commercially, and our customers are seeing the initial benefits of our acquisition with BT Sport now available to EE pay monthly customers. We remain focused on improving customer experience and 100% of EE pay monthly calls are now handled in UK and Ireland contact centres. We’ve reduced engineer missed appointments by more than a third since last quarter and Openreach is again ahead on all 60 minimum service levels set by Ofcom.

Fibre broadband is available to well over 25m premises and take-up remains strong. At a retail level, we performed well achieving a 79% share of broadband net adds in the quarter. We were pleased to renew our FA Cup rights during the quarter and we look forward to showing more games from the Premier League at a much better time slot, starting in two weeks. Our customers can also look forward to all the exclusive live action from the UEFA Champions League and UEFA Europa League once again this year.

Our investment plans remain central to our future and so we will be rolling out further fibre in the coming months, as well as 4G through the Emergency Services Network contract. Our aim is to make these services as universally available as we can, whilst also deploying a new generation of ultrafast broadband. Such investment requires regulatory clarity, particularly in these uncertain times.

Having listened to Ofcom and industry, we have set out our proposals for greater independence and transparency for Openreach. Our proposals can form the basis for a fair, proportionate and sustainable regulatory settlement and we believe they can also enable Ofcom to bring its Digital Communications Review to a speedier conclusion. We will continue to engage with Ofcom over the coming months.”

The main challenge for BT now is with how best to meet the many expectations of Ofcom’s Strategic Review, which is still threatening to split Openreach from the operator’s control unless they voluntarily agree to some big changes and make their national network more accessible to rivals.

Most of the regulator’s expectations aren’t likely to cause too much pain, but the main sticking point is one of governance. In particular Ofcom wants Openreach to become a “legally separate company” and for it to be able to have confidential discussions with its customers without oversight by BT, but the operator opposes those requirements (here).

In keeping with all this the Government’s new Digital Economy Bill is quietly working to make it even harder for companies to challenge regulatory decisions and the vote to leave the EU may well remove another legal option for BT.

On the other hand splitting BT would be complicated (e.g. legal challenges, pensions etc.) and may not be the magic bullet that some seem to expect, particularly in regards to boosting general service quality and the question of improving connectivity for the most difficult to reach / digitally disadvantaged rural and urban areas.

However it could perhaps resolve the question of Openreach’s fairness and might result in more investment going towards FTTP/H services, albeit still predominantly more of a benefit for the low hanging fruit of cities and towns. Ofcom should publish a final statement by the end of this year, which will reveal whether or not Openreach is to remain under BT’s control.

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Mark Jackson
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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25 Responses
  1. Avatar Steve Jones

    I’d describe that FTTC/FTTP growth figure as being on the modest end of steady. Annualised it’s about 1.3m lines (1.5m increase in 2015/16). Full year incremental turnover increase to OR would amount to perhaps £130m depending on the product mix. That was evidenced in 2015/16, which was the first time in 4 years OR had increased turnover and

    This gain could all be wiped out should Ofcom put in place price controls on GEA-FTTC (which I believe is being investigated at the moment). TalkTalk commissioned a report which claimed that the base product ought to be priced at £4 a month for the base product, which would effectively halve GEA-FTTC turnover (from perhaps £550m to £275m). I doubt that the TalkTalk number is realistic, but even a cut of £2 off the GEA-FTTC monthly wholesale cost would reduce OR turnover by £150m.

    In a rational world there would probably be a general move to cabinet based services which would hold out the eventual option of closing a lot of local exchanges and their associate costs and allow better use of the frequency spectrum. However, it would also leave LLU operators (and BTW) with a lot of “stranded assets”, so I don’t see it happening any time soon except, maybe, at some small exchanges without LLU presence. Even then it’s not easy and would require a change to the regulatory environment, especially in regard to mandatory (full) MPF and the nature of voice services.

    • Avatar Steve Jones

      nb. I should add that (reading other reports), OR turnover was flat at £1.25bn for the quarter (whilst Consumer was up 9%).

      The Telegraph (characteristically) headlined the news giving the impression that OR revenues were up, which was then contradicted in the content. Of course it was BT group revenues that had increased, not OR’s.

      http://www.telegraph.co.uk/business/2016/07/28/bt-pleas-for-ofcom-fairness-on-openreach-as-revenues-rise/

    • Avatar GNewton

      This is not a “rational world”, certainly not with BT, nor with the regulatory framework. However, there is nothing preventing BT from switching over all of its DSL lines to VDSL cabinets, or FTTP. Then set up a “bad assets” company specifically for LLU lines, and put pressure on Ofcom and other telecoms to do something about it.

    • Avatar Steve Jones

      @GNewton

      “There is nothing stopping BT moving all its DSL lines to VDSL cabinets”

      Whilst BT Consumer and Plusnet could do that (albeit at some cost), there is no way that BTW can do that without withdrawing the service from all the other retail ISPs that use the BTW ADSL network, of which there are very many. BTW has no control over their retail customers or whatever knock-on effect if would have. Further, it’s utterly pointless BTW withdrawing their ADSL exchange based services (at least at exchanges where there is an LLU presence) as it would not enable the ANFP to be optimised for 100% cabinet-based services.

      Further, their is a requirement to provide voice lines and MPF/WLR at all locations. The SOGEA service does not allow for that which means that exchanges cannot be rationalised.

      In short, what you suggest is utterly pointless as it would cost money and achieve nothing. What is required is a strategy, and the NICC and Ofcom’s involvement are major impediments to what should be done on technical grounds.

    • Avatar GNewton

      @Steve Jones: That was your daily “Can’t Do” lecture for BT 🙂

    • Avatar Steve Jones

      @GNewton

      Do you ever actually engage with the validity of the arguments? Perhaps you can tell me what BT Consumer & Plusnet moving all their retail customers to cabinet based services would achieve in network terms? Of perhaps you know of some way that OR could force all lines over to cabinet based services?

      So there’s a challenge for you.

    • Avatar GNewton

      @SteveJones: I have yet to hear one positive plan from you. All you are worried about is the welfare of your BT shares. You have already identified how irrational things are at the moment because of keeping so many exchange-based services. So go one step further, and try to think out of the box and offer us a solution.

      My proposal was the equivalent of a “bad bank” setup for BTs old toxic assets, which isn’t doable at the moment because of the irrational regularity framework, hence the need for keeping the pressure on Ofcom to do changes to the letter.

    • Avatar Steve Jones

      I’ve no idea what you mean by “bad bank assets”. If you mean assets which a company has to write-down before fully depreciated, that’s a standard part of any company activities. There are always a certain proportion of capital assets which have to be written down early and the company will take a hit. The finance departments don’t like it of course (as it hits the headline profit figures) and usually have an annual budget.

      However, if you are proposing that telcos can just dump stranded assets into a “bad bank” and the government will compensate them for the remaining book value, then I would respectfully suggest that’s cloud cuckoo land.

      Now I’ve no idea what the remaining book value of LLU (or BTW) MSANs and other exchange based equipment is, or what lifetime they wrote into the original business plans, but I suspect that it’s non-trivial.

      As for positive proposals, I’ve made several, not the least of which is the one above. That is migrate services to cabinet based ones, at least in some areas, refine the ANFP to make best use of the frequency and eliminate the requirement for traditional voice lines in those areas. It would enable the closure of some exchanges, reduce the number of points-of-presence required and go a long way to helping the USO be met. How is that not a positive suggestion? It’s just a fact that the way Ofcom regulate the market effectively stops it at the moment.

      I’ve also made proposals for how a USO might be funded using a levy system or changes in the regulatory regime to eliminate national pricing to incentivise investments in rural networks.

      I had a career in assessing and working on many major (and successful) projects, and I am extremely familiar with the sort of gung-ho attitude which ignores practical issues and leads to disastrous failures. Your comments have that written all over it.

    • Avatar GNewton

      @Steve Jones: Your so-called proposals aren’t practical, and are way short short of being in the rational world. As you yourself admit, for most exchanges a general migration to cabinets, away from the exchange, won’t work. It may make technical and economical sense, but won’t work because of LLU, BTW, and Ofcom. Eliminating a national pricing regime won’t happen, and won’t be the interests of consumers.

      I never suggested that the government should compensate them for the remaining book value of these “bad assets”. There have been numerous examples in the industrial history where businesses failed to keep up with current technologies and markets, and as a result had become obsolete. Once BT (stripped off its Openreach) could use any network provider, Openreach would have to become more competitive, forcing it to do more investments, and to take other investment partners onboard. A win-win scenario (except for some BT shareholders with their short-term perspecitves).

    • Avatar FibreFred

      You really are a troll gnewton it is you who isn’t rational and when presented with real actual responses as to why something can’t be done you just squirm and say “can’t do”. It is very easy to see when you are out of your depth, you sink a few posts in usually

    • Avatar Steve Jones

      @GNewton

      Really? You think if BT Group was stripped of OpenReach it would suddenly spend a lot of money on new network infrastructure? Well, of course it would, but that would be on the EE network and, of course, BTW (who lease circuits from OR at the moment). Maybe they would consider leasing fibre from other network operators for business lines, but that’s about it. But as OR’s is the only large scale consumer network of any scale with wholesale capability then it will (like Sky, TalkTalk etc.) end up just being their customer. The financial model and imperatives for OR would be no different from what it is now save that it will have lost it’s anchor customer (unless the new BT Group made some sort of agreement).

      Really all this stuff is irrelevant. It changes nothing.

    • Avatar GNewton

      @Steve Jones: So I think we can agree that the idea of generally switching exchange based lines over to cabinet-based ones, or to FTTP, won’t be doable for a while.

      As regards Openreach becoming an independent company: You are probably aware that Ofcom and many other parties see it differently than you. But thank you for sharing your thoughts with us here on this forum on this. According to Ofcom’s Digital Communications Review from Feb 2016, some of its goals are:

      – Reform of Openreach. Openreach needs to change, taking its own decisions on budget, investment and strategy, in consultation with the wider industry.

      – Better quality of service across the telecoms industry. Ofcom intends to introduce tougher rules on faults, repairs and installations; transparent information on service quality; and automatic compensation for consumers when things go wrong.

      This has then lead to the option of making Openreach more independent than it is at the moment.

      BTW.: Please ignore FibreFred, he again displays the symptoms of Prosopagnosia and has started calling people trolls here again. He does it every week, it’s a pity the forum is moderated here.

    • Avatar GNewton

      Correction: … it’s a pity the forum isn’t moderated here.

  2. Avatar Indigomells

    When people realise that it’s not BT that’s causing Openreach to implode in on itself and the only thing to stop it happening is to get rid of 70% of the lower and middle managers within it, customers might start getting better services. You don’t stop the rotten egg getting worse by taking it out of the nest.

    • Avatar wireless pacman

      Could not agree more,based on my continued painful experience with those clowns.

    • Avatar fastman

      really — When people realise that it’s not BT that’s causing Openreach to implode in on itself and the only thing to stop it happening is to get rid of 70% of the lower and middle managers within it, customers might start getting better services

    • Avatar GNewton

      I agree with your statement about BT’s poor management. After all, it’s one of the worst rated companies in the UK, mainly because of its poor customer service. This is acknowledged by Ofcom in its initial conclusions of from the Strategic Review of Digital Communication, which said this in Feb 2016:

      – improvements in the quality of service delivered by the whole of the telecoms industry, including Openreach, BT’s access network division;

      – increased independence of Openreach from BT so that it is more responsive to all of its customers;

      There are posters here on this forum who are so irrationally and emotionally attached to BT they can’t even comprehend that there are serious issues with this company that need to be resolved.

  3. Avatar fastman

    Openreach supports 550 + communication providers – the majority whch do not offer any VDSL — and you think that there is nothing preventing T from switching over all of its DSL lines to VDSL cabinets, or FTTP

    • Avatar FibreFred

      He doesn’t understand fastman he’s totally out of his depth, he just simplifies things to a level of understanding that works for him, which is low.

      Anything he can’t grasps goes in the “Can’t do” bucket.

    • Avatar TheFacts

      All about his current lack of VDSL in Brightlingsea.

  4. Avatar FibreFred

    Take this:

    “Openreach would have to become more competitive, forcing it to do more investments”

    Investments with what? There own money? They have none. Who is investing in Openreach.

    BT Group invest a lot and they spend that money getting the best results possible for that money, i.e. using the tech to deliver what they can for the money.

    Which other investors are lining up with even more money than BT Group that will allow them to roll out FTTP on a large scale.

    Any answers GNewton?

    Or is it a simple

    “Can’t do”

  5. Avatar fastman

    so he doubles as Jnuehoff as well then 1!!! —
    interesting that exchange enabled under BDUk I assume that area in the exchange did not meat the Value for Money Criteria

    • Avatar FibreFred

      Correct Jnuehoff/GNewton 100% same person, but strenuously denied despite being very plainly obvious.

  6. Avatar fastman

    not a million miles away form either

  7. Avatar Ignition

    I still have some popcorn left, could we get back to the drama?

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