In terms of overall customers the growth at TalkTalk may not be that inspiring having added 10,000 new customers in the last quarter, but there are plenty of reasons to celebrate at TalkTalk HQ as they release the results for the 12 months to 31st March 2014. This means that as of 31st March TalkTalk had 4,196,000 customers, marginally closing the gap on Virgin Media.
Just in time for this investor update TalkTalk broke through the 1 million customers on its TV platform via the Plus TV or Essentials TV product on May 12th, which makes them the fastest growing TV platform in the UK, adding 185,000 customers in the last quarter and one third were new customers to TalkTalk (total was 917,000 on 31st March). The payoff for TalkTalk is the amount of business via the pay per view movies and boosts that people purchase with 228,000 pay per view transactions and 21% of the TV customers pay for a boost for one form of content or another.
While overall TalkTalk only added 10,000 customers, the full LLU network which is where TalkTalk prefer to be running customers due to lower costs actually added 38,000 customers, which was offset by the lose 15,000 off-net customers (i.e. those on a BT Wholesale product) and another 10,000 from the shared LLU platform.
Fibre features heavily in the TalkTalk financials and we have a figure for the number of customers using GEA-FTTC 207,000 a rise of 30,000 in the new quarter alone. The statement below is a good summary of what we see daily on our forums, i.e. that if people can get speeds sufficient for HD video streaming they are reluctant to upgrade to fibre.
"Demand for fibre from our customers remains modest except when it can deliver transformational improvements in their broadband experience e.g. for customers whose copper speed is too low for them to take TV, as demonstrated by the 50% of our 207,000 fibre customers who take TV."Extract from TalkTalk financials
Fibre also features as we look forward to the recently announced York FTTP roll-out with speeds of 1 Gbps possible. The aim being to roll-out FTTP city-wide (we did not see any statement confirming this means 100% of homes which is what many presume from the word city-wide). The initial investment of £5m from TalkTalk should mean 20,000 premises get FTTP as an option and similar levels of investment are expected as the phases expand across the city.
"Our initial investment in the joint venture, which will see us deploying to 20,000 homes will be £5m. Subsequent investment to deploy across the remainder of the city will be of similar order of magnitude. We believe the economics of our approach to FTTP could prove highly attractive, with a combination of scale and low cost build technology delivering a significantly lower cost per home passed than for the current FTTC infrastructure.
We expect to announce the process for selecting the next two cities in due course, and are excited by the long term potential for a national roll-out.TalkTalk on Gigabit fibre roll-out
While we know lots of people are getting very excited by the roll-out, we have been here before and not just with CityFibre, the commercial Openreach roll-out originally promised 10% FTTP for the UK until the accountants reigned in ambitions after doing their cost analysis. CityFibre already has a 20,000 premise FTTP network in the form of Bournemouth, and also at one time talked of having £500m to roll-out FTTP elsewhere which never materialised. All credit to CityFibre for continuing down the path, but with York already widely covered by Virgin Media, commercial FTTC and gap funded improvements that are set to bring Openreach FTTC to many more and even some FTTP, there is going to be stiff competition for customers.
If CityFibre, Sky and TalkTalk succeed then York will be world leading as there is probably no other city in the world with such a wide choice of broadband technology. Looking forward TalkTalk talk of eventually hitting 10 million FTTP premises passed.
The first question now is whether Liberty Global will see this challenge to their cable broadband/TV market share coming and react with more investment in new network/products. The second question is whether the BT board will see a change of heart on FTTP if TalkTalk and Sky are seen to be generating extra profit via FTTP, BT has been able to follow its traditional safe stepped approach to technology and network upgrades to date since no major challengers have appeared, we don't expect BT to react yet, but maybe in two or three years if the York FTTP roll-out does cover the city and has decent take-up we may see the FTTP supporters at BT win their on-going battle.