Performance for O2 in the last financial quarter in terms of fixed line broadband is dissappointing, the majority of the major providers are all growing in size as broadband penetration grows in the UK, but O2 is still shedding customers. In the last quarter they lost 22,500 customers, dropping the user base to 579,500.
The wholesale division showed some growth adding 2,300 customers in the quarter to 36,400. While in the UK we can quickly attribute this slide due to competition with the FTTC services and faster cable products, across Europe Telefonica is showing a similar reduction in numbers, with broadband customers dropping to 9,510,700 from 9,608,000 at the end of June 2012.
O2/Be in the UK only use shared LLU in the UK (using WLR for telephone services), unbundling just the broadband, in contrast to TalkTalk and Sky who unbundle the phone and broadband. This means that investment in LLU hardware may be undermined by the shift to the Generic Ethernet Access products that Openreach now offer, whereas for Sky and TalkTalk the LLU hardware is still providing a useful revenue generating function with the voice access.
The other problem that has arrived is the launch of YouView which with the free box offers via TalkTalk and BT may further erode O2 customer numbers.