Champions League and BT TV boost profits, but consumer and global sales are down while Openreach competitors fight back in broadband battle
The number of superfast broadband connections on the Openreach fibre network rose by 415,000 during the past quarter, bringing the total figure to five million – or 21 percent of premises that can receive superfast services.
Once again, BT secured the lion’s share of customers upgrading to superfast, adding 212,000 to its fibre user base, while rivals on the Openreach network such as Sky and TalkTalk secured a combined 230,000. BT’s retail division now has 3.4 million fibre users and 7.9 million broadband customers in total, when copper is taken into account.
Overall, 160,000 entirely new connections were made to Openreach, 51 percent of whom chose BT, bringing the total Openreach user base to 19.6 million.
BT’s success contributed to a seven percent increase in consumer revenues to £1.1 billion, a figure which was also boosted by BT Mobile, which now has 200,000 users, and a strong performance by BT TV. Thanks to the addition of Champions League football to BT Sport, the company added a record 106,000 customers during the period.
However overall revenues remained flat as business, wholesale and BT Global Services revenue fell – although Openreach’s revenue did go up by two percent. BT will be pleased though as pre-tax profit rose by 14 percent to £642 million.
BT’s purchase of premium sports rights and the pending £12.5 billion takeover of EE mean it should be well equipped to compete in a converging UK communications market. However despite the gains, observers note that despite TV gains, mobile and broadband performance has been a little disappointing.
“Retail broadband net additions of 82,000 were the lowest in three years as BT came up against strong competition from Sky,” said Kester Mann, principal analyst, operators at CCS Insight. “Its close rival has been offering free ADSL and fibre for a year as part of an aggressive promotional drive.
“Uptake of BT Mobile has been steady if a little unspectacular, with a total of “more than 200,000” subscribers since launch in March 2015. Following yesterday’s approval from the CMA to buy network operator EE, the company will need to make careful decisions around positioning and branding of its mobile service.”
There is also the prospect that Ofcom could throw a spanner in the works with its once-in-a-decade review of the sector, with rivals calling for Openreach to be made an independent company. Critics claim the current structure hands BT an unfair advantage and stifles investment, accusations BT denies.
“Fibre broadband is a success story and we continue to invest heavily to help the UK remain a broadband leader among major European nations,” said BT CEO Gavin Patterson. “We want to get fibre broadband to as many people as possible and we are also pushing ahead with our plans to get ultrafast broadband to ten million premises by the end of 2020.”
BT recently announced plans to increase minimum speeds to 10Mbps, extend superfast coverage to places not covered by the government’s existing 95 percent target by 2017, and to bring ‘ultrafast speeds’ to the majority of the UK population within a decade. It has also promised to improve service standards for its Openreach customers.
However, it says all these pledges depend on the outcome of Ofcom’s review. It has called for stable regulatory environment and one that promotes investment. Naturally, it opposes any breakup of BT and Openreach, claiming the current arrangement allows the unit to access BT’s R&D and capital.
“In the midst of the financial crisis, BT invested big while others held back,” Patterson said at Broadband World Forum in London last week. “The rollout of fibre has been a big success in the UK. Were on budget and on track. There are more people able to connect to superfast broadband than the mains gas supply.
“This fibre success story is no accident. It has been triggered by investment and competitive environment.
“If BT had been separated in 2008, I doubt very much whether Openreach would have made the investments to keep the UK ahead as an Internet economy.”
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