Analysis of Q1 2024 UK ISP metrics
In summary
Total Q1 2024 FTTH/P/B, FTTC, cable, FWA/satellite and DSL wholesale and retail connections saw a very slight increase during the quarter and stood at an estimated 28.90m from 28.86m q-o-q and similar to 28.89m in the previous year.
The fixed broadband retail market remained relatively static with ~38k net broadband subscriber additions compared to ~29k net additions in Q4 2023, and -65k at the close of Q1 2023.
In our report looking at FTTP coverage as it stood in January 2024, coverage was just over 20.7m premises (64.7%), up from 18.7m in Q4 2023; across the UK, 19% of premises still lacked gigabit access, down from 21% three months earlier.
We estimate that BT’s Consumer division (which includes business) saw an overall loss of ~66k subscribers; compared to Q4 2023 this represented around a 0.62% decrease in the retail segment, but saw strong growth in its FTTP base adding 258k FTTP connections to reach ~2.58m up 40% y-o-y.
BT Group’s revenue growth declined to -0.2% due to quarterly one-offs as the Group restructured its offices and paid lease terminations, dealt with historical billing inaccuracies in the Business segment along with its Consumer division seeing a slump in equipment sales, which was slightly offset by its fixed segment’s performance of 5.8% growth due to increased ARPU.
Openreach’s FTTP connections increased by 397k q-o-q and reached 4.70m up from 4.30m.
Openreach hit its pace FTTP rollout target of 1m premises passed during the quarter which will see it reach its build target of 25m premises by the end of 2026; its average build rate reached 78k premises per week with a footprint of 13.81m premises.
For the other major ISPs, Vodafone had the strongest quarter with ~52k broadband net additions, followed by Sky with ~29k, while Virgin Media O2’s (VMO2) performance was less than impressive with ~5k additions.
VMO2’s broadband customer base increased to 5.72m but its overall in-footprint penetration rate decreased to 33.3% compared to Openreach’s 34%.
VMO2’s FTTP fixed network deployment (primarily on behalf of nexfibre) passed 1m premises throughout the year; an additional 194k were added in Q1 2024 down from 299k.
Comcast, Sky UK’s parent company, reported 65k net losses in its international connectivity markets; however, we estimate Sky UK to have added around 29k broadband net adds to close the quarter with 5.77m broadband subscribers.
Independent (or AltNet) providers[1] also struggled with economic headwinds as they have slowed down their FTTP network rollouts to focus on subscriber take-up, and saw ~70k net additions down slightly from around ~80k additions in the previous quarter.
In May, CityFibre reported that its ‘customer connections now exceed 400,000, an increase of 77% year-on-year.’ Its network covered 3.6m premises with 3.3m being ready for service.
During Q4 Vodafone’s fixed broadband consumer base grew by 3% (up from 2.1% in Q3) and saw 39k net additions, up from 27k in the previous quarter, bringing its customer base to 1.331m.
On 1 March, TalkTalk Group announced the launch of its rebranded wholesale segment PlatformX Communications (PXC).
Retail (including consumer and business) market overview
Retail fixed line broadband segment remains stable
Q1 2024 saw modest growth in total consumer and business fixed connections to reach 28.90m; DSL connections dropped by 2% totalling 2.19m, FTTC reduced by 3% reaching a total of 14.07m, with FTTB/H/P lines picking up the slack with a 7% increase in uptake totalling 7.18m (Figure 1).
Source: Point Topic estimates and company reports.
BT Group only publishes detailed metrics in quarters 1 and 3 and we estimate BT’s Consumer segment to have an overall loss of ~66k subscribers during the quarter but re-contracted or upgraded around 258k FTTP connections to see its full fibre base reach 2.58m (2.42 Consumer and 158k Business) up by 40% y-o-y.
The major ISPs saw a modest recovery during the quarter, with Vodafone seeing the largest increase with ~52k broadband net additions (Table 1).
*BT Consumer includes EE and Plusnet subscribers, *Quarterly growth attributed to integration of Shell Energy Broadband subscriber base which was previously a wholesale client, see Summary section. Source: Point Topic estimates and company reports.
We have identified around 16 AltNet operators whose FTTP footprints when aggregated create a significant network that continues to rival Openreach’s. Their combined estimated footprint covers over 12m premises, however, with financial backing easing, costly overheads increasing, along with modest take-up rates, mean that overall penetration remains are still significantly lagging behind Openreach’s at around 15% at the close of the quarter.
*BT Consumer includes EE and Plusnet subscribers, Source: Point Topic estimates and company reports.
BT continued to dominate the sector with an estimated 10.43m subscribers as its churn rate continued to remain low at around 1.1% marked an impressive quarter and navigated the inflation-linked price rises successfully.
VMO2 had a very modest 5,300 net broadband additions bringing its base to 5.71m. The operator has stopped reporting its pay-TV subscribers, indicating that the segment is largely in decline or will begin to be phased out as an OTT service.
Sky also saw moderate growth with ~29k net additions bringing its subscriber base to 5.77m. Its pay-TV segment suffered with an estimated ~30k losses.
Vodafone reported 52k broadband additions up from the previous quarter’s 39k adds ending the quarter with 1.38m subscribers.
TalkTalk continued to grapple with declines in revenue and subscribers and for Q1’s reporting, we have realigned its subscriber base to account for the transference of Shell Energy Broadband’s c.480k subscriber base which previously a wholesale client had been moved to its retail segment. Taking this into consideration we do estimate TalkTalk to have lost around 50k of its own-brand subscribers throughout the quarter, but have adjusted the overall base to account for the addition of Shell’s subscribers bringing its overall fixed line connections to an estimated 3.42m at the close of Q4.
*BT Consumer includes EE and Plusnet estimates. Source: Point Topic estimates and company reports.
Infrastructure and wholesale market overview
Wholesale connections shored up by Openreach’s expansion and Equinox 2 pricing initiatives
Total Q1 2024 FTTH/P/B, FTTC, cable, FWA/satellite and DSL connections decreased during the quarter and stood at an estimated 28.90m up slightly from 28.86m q-o-q and up from 29.89m y-o-y.
FTTP connections are picking up the slack in terms of copper-based legacy product losses, to reach a total of just under 7m at the close of the quarter up from 6.20m in Q4 and 5.03m y-o-y.
Openreach’s FTTP connections increased by 397k q-o-q (down from 432k) and reached 4.30m up from 4.70m, delivered its peak FTTP network rollout of 1m premises passed in the quarter at an average rate of around 78k premises per week with a footprint of 13.81m (Figure 4).
Source: Point Topic estimates and company reports.
Equinox 2’s full fibre discount pricing discounts have helped the supplier see an uptake in third-party communication providers signing up to the scheme. We estimate around just over 16% of Openreach’s overall 34% FTTP take-up rate attributed to ISP reseller connections and just over 17% being BT Consumer subscribers.
AltNets had a stable quarter with around 75k net broadband additions up from 66k in Q4.2023 For a more detailed overview of the Q4 2023 – Q1 2024 performance by suppliers see Table 2 below.
Source: Point Topic estimates and company reports.
[1] Point Topic tracks 106 AltNet providers ranging from micro / local ISPs to larger providers with national coverage.
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