Analysis of Q3 2023 UK ISP metrics
In summary
Total Q3 2023 FTTH/P/B, FTTC, cable, FWA/satellite and DSL wholesale and retail connections decreased during the quarter and stood at an estimated 28.718m down from 28.746m q-o-q but down considerably from 29.036m y-o-y.
The fixed broadband retail market slowdown resulted in a second consecutive quarterly loss of 27,600 net broadband subscribers (down from ~87k in Q2 2023) with y-o-y uptake growth falling by -1.09% compared to -0.97% in the previous quarter’s annual growth.
Overall we estimate that at the close of Q3, FTTP coverage was just over 17.4m premises (54.5%), up from 16.3m in Q2 2023; cross the UK, 23% of premises still lacked gigabit access, down from 25% three months earlier.
We estimate that BT’s Consumer division (which includes business) saw a loss of 37k subscribers; compared to Q2 2023 this represented around a 0.42% decrease in the retail segment, a 4% loss in new business orders and a 25% loss in business contract renewals.
Openreach’s FTTP connections increased by 364k q-o-q and reached 3.871m up from 3.507m, BT’s Consumer unit added 335k FTTP connections to reach 2.080m up 40% y-o-y.
Of the four major ISPs, Virgin Media O2 (VMO2) had the strongest quarter with ~41k broadband net additions, followed by Sky with ~38k, with Vodafone ~27k whilst TalkTalk continued to haemorrhage subscribers for the third Econsecutive quarter with an estimated ~200k net losses.
During the quarter, AltNets FTTx (pre-dominantly FTTH/P/B) consumer broadband base reached an overall estimated 2.325m up from 2.260m in Q2 2023.
Retail (including consumer and business) market overview
Retail fixed line broadband segment continues its decline
Q3 2023 saw a continued decline in total consumer and business fixed connections to reach 28.718m; DSL connections dropped by 18% totalling 920k, FTTC reduced by just over 3% reaching a total of 15.470m, with FTTB/H/P lines picking up the slack with a 13% increase in uptake totalling 5.800m (Figure 1).
The major ISPs, excluding TalkTalk, saw a modest recovery during the quarter, with Virgin Media O2 (VMO2) seeing the largest increase with 41k broadband net additions (Table 1).
AltNets continue to streamline operations, announce restructures, job losses and slowdown their FTTP network deployments to concentrate on uptake in their footprints, but had a strong quarter with an estimated 65k net broadband additions, recovering from overall losses (~27k) in Q2 2023; reaching an estimated 2.325m subscribers.
Figure 4 provides an overview of the fixed line broadband operator’s market shares since Q3 2021. Since Q2 2022, Point Topic have changed its retail market statistical data reporting to include a smaller cohort of rural, urban, regional and national AltNet providers and stopped tracking providers whose FTTP footprints or take-up did not meet our threshold criteria. Therefore, there will be a dip in quarterly market statistics for AltNets as Point Topic shifted its focus onto those providers deploying gigabit-capable networks at scale.
Retail FTTP trends
Retail and business FTTP connections reached an estimated 5.786m at the end of Q3 2023. Figure 5 below represents the growth in full fibre connections (for the major ISPs and Altnets) from Q3 2021 when full fibre deployments were gaining pace and Covid lockdown measures resulted in more demand for faster more reliable broadband speeds.
Worth noting is Virgin Media O2 has been excluded from the representation below as its subscribers are predominately serviced by its DOCSIS 3.1 cable network. Its JV with nexfibre, future deployments, acquisition and integration of regional supplier Upp is outlined further in the infrastructure section of this report.
Retail new subscriber entry level fixed line pricing, superfast vs. ultrafast
Q2 to Q3 2023 entry level superfast pricing dropped by 1.5% with the average price coming in around £26 per month (Figure 6).
Conversely, in terms of entry level ultrafast (full fibre, with speeds greater than 100 Mbps) pricing tariffs have decreased slightly to reach an average of £30 per month (Figure 7).
In addition to the major suppliers, we tracked 5 AltNet providers ranging from the larger national players (Hyperoptic, Gigaclear, Fibrus) to London-focused urban supplier Community Fibre, and regional ISP brsk.
BT also remained the most costly for its entry level ultrafast product, followed by Hyperoptic, Sky, VMO2, and brsk; regional rural provider Gigaclear by far led the group throughout the year coming in well below average with their entry level symmetrical 200 Mbps speed tier coming in at £17 per month.
Infrastructure and wholesale market overview
Wholesale broadband connections slowing in a saturated market
Total Q3 2023 FTTH/P/B, FTTC, cable, FWA/satellite and DSL connections decreased during the quarter and stood at an estimated 28.718m down from 28.746m q-o-q but down slightly from 29.036m y-o-y.
FTTP connections are picking up the slack of in terms of copper-based legacy product losses, to reach a total of 5.175m at the close of the quarter up from 5.101m in Q2 and 4.093m y-o-y (Figure 9).
Openreach’s FTTP connections increased by 364k q-o-q and reached 3.871m up from 3.507m and reported a record FTTP build of 860k premises passed in the quarter at an average build rate of 66k per week to reach 11.852m premises (Figure 10).
VMO2 returns to growth as nexfibre deployments gain momentum
VMO2 had a strong quarter with ~41k broadband net additions up from its loss of 15,300 connections in the previous quarter. VMO2’s Project Lightning rollout, mostly using FTTP (with a mixture of RFoG and XPS-GPON) drew to a close at the end of 2022. In its Q4 2022 results it VMO2 stated that it had passed 188k premises with 24k of those being subsequently transferred to nexfibre at the close of the year.
In Q1 2023, the supplier reported that it had expanded its full fibre network by 107,800 premises primarily from rollout on behalf of nexfibre increasing this to 175,500 premises at the end of Q2. In Q3 250,800 additional premises were passed with fibre with more than 500k premises passed so far this year (Figure 11).
nexfibre reveals 2024 rollout plan
nexfibre aims to bring full fibre to more than 5m premises across the UK by the end of 2026. In November, the wholesale supplier published its first quarterly update on progress of its nationwide rollout and planned build locations for 2024 (Figure 12).
The next stage of nexfibre’s build will see the business significantly expand its footprint across the UK, including significant coverage in Cheshire, Kent, Durham, and with both Wales and Scotland being well-served.
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