TalkTalk results show TV is growing rapidly as broadband driver
With the dominance of Sky TV and half the UK able to access cable TV the traditional thinking was that IPTV delivery platforms were not needed in the UK, but the rise of OTT subscription services like Netflix and Lovefilm appear to have awoken a latent desire for more choice and the launch of YouView in 2012 is starting to pay dividends for providers like TalkTalk.
TalkTalk in its latest financial results has revealed that in the last quarter it has added 150,000 subscriptions to its YouView based TV service, taking the total to 230,000. Almost three quarters of those buying the TV service are previous Freeview or Freesat customers, so the upgrades will be a mixture of wanting to add the extra channel options, and the free YouView box with its recording capabilities. The majority of TV viewing is via the free to air channels at 19.5 hours per week, but 2.5 hours of paid content are watched on average per week.
The broadband subscribers picture is a mixed bag, and while the overall number of subscribers has increased to 4,0630,000 (increase of 13,000) this hides the fact that there strong growth in the full LLU (MPF) customer base. The loses from legacy SMPF (we presume old Tiscali customers) and off-net areas make the figures reducing the overall level of growth.
One area that is starting to mount up is that TalkTalk now has 73,000 fibre customers, which while still small suggests that sales are starting to ramp up. The need for stable speeds above 3 Mbps for the on-demand YouView content may be helping to drive take-up, plus the increasing number of Internet devices people have in the average home.
The TalkTalk LLU network is the largest ADSL2+ network in the UK, with the 2,724 exchange covering approximately 95% of the UK population, and expansion has not finished the provider is looking to add another 300 exchanges in the next year (previous year saw 216 exchanges added). Interestingly the holy grail of dark fibre appears to be a fairly small problem for TalkTalk:
"In conjunction with our unbundling programme, we continue to expand the capacity of our network, which we expect to grow by 50-100x over the next 3-5 years. The favourable economics of our network, which allows us to lease dark fibre at very competitive rates, means that we will be able to achieve this capacity expansion within our long run capex guideline of 6% of revenues."TalkTalk on dark fibre
The extent of the TalkTalk LLU network also means that businesses can benefit, and the firm has some 10,000 Ethernet or EFM circuits installed (1,500 in the last quarter).