Contrasting fortunes: UK broadband, telephony and pay TV trends Q2 2022
Market revenue growth continued to accelerate in Q2 to reach 3%, but broadband growth worryingly dipped as the lockdown boost waned.
Differing pricing dynamics (among other factors) led to very different outcomes for the main players, with BT’s growth surging to 7% while VMO2’s revenue stayed in decline.
Underlying trends of weakening broadband growth, keener pricing and customer bargain seeking point to slower growth ahead … until the next price increase.
Related reports
BT: Price rise lands well, but costs rise too
3 August 2022BT Group’s revenue growth surged in Q1 to 1%, the first time it has been positive in five years, with a stronger than expected boost from the April price rises partially offset by the Virgin Mobile MVNO loss.
EBITDA growth, however, actually dipped to 2%, with little operating leverage due to cost pressures, although the company is still very confident in its full year EBITDA guidance (which implies 4% growth).
BT is far from immune to macroeconomic pressures, with pressure on costs, corporate revenue and signs of a sharp dip in broadband market growth, but it is well placed to deal with them given strong growth at Consumer and Openreach.
Virgin Media O2: Toil and trouble
3 August 2022VMO2 struggled to fully capitalise on its price increases this quarter, with much of the benefits absorbed by retention discounts and tariff pressure.
EBITDA growth of 4% is nonetheless a solid result in a challenging market and guidance looks achievable, albeit not as easily as it previously did.
The opaque nature of the relationship with the new network company makes it difficult to establish whether VMO2 is capitalising on the current glut of speculative infrastructure investment, or is at risk of being a victim of it.
Altnets in the UK: Growing pains
19 July 2022UK altnet full fibre rollouts are accelerating, with an aggregate build pace close to that of Openreach, but customer acquisition is not growing at the same pace, and overbuild in the most attractive areas is becoming a significant issue.
Altnet business models remain challenging and are getting worse as Openreach builds out, and (although there are some notable exceptions) most will need to rapidly achieve scale and turn around their performance to survive.
Consolidation is very likely, along with business failures, and while some market share loss for Openreach looks likely as serious scale players emerge, the downside is limited, and even more so for retail ISPs.
BT: Price rise lands well, but costs rise too
3 August 2022BT Group’s revenue growth surged in Q1 to 1%, the first time it has been positive in five years, with a stronger than expected boost from the April price rises partially offset by the Virgin Mobile MVNO loss.
EBITDA growth, however, actually dipped to 2%, with little operating leverage due to cost pressures, although the company is still very confident in its full year EBITDA guidance (which implies 4% growth).
BT is far from immune to macroeconomic pressures, with pressure on costs, corporate revenue and signs of a sharp dip in broadband market growth, but it is well placed to deal with them given strong growth at Consumer and Openreach.
Virgin Media O2: Toil and trouble
3 August 2022VMO2 struggled to fully capitalise on its price increases this quarter, with much of the benefits absorbed by retention discounts and tariff pressure.
EBITDA growth of 4% is nonetheless a solid result in a challenging market and guidance looks achievable, albeit not as easily as it previously did.
The opaque nature of the relationship with the new network company makes it difficult to establish whether VMO2 is capitalising on the current glut of speculative infrastructure investment, or is at risk of being a victim of it.
Altnets in the UK: Growing pains
19 July 2022UK altnet full fibre rollouts are accelerating, with an aggregate build pace close to that of Openreach, but customer acquisition is not growing at the same pace, and overbuild in the most attractive areas is becoming a significant issue.
Altnet business models remain challenging and are getting worse as Openreach builds out, and (although there are some notable exceptions) most will need to rapidly achieve scale and turn around their performance to survive.
Consolidation is very likely, along with business failures, and while some market share loss for Openreach looks likely as serious scale players emerge, the downside is limited, and even more so for retail ISPs.