Market Insight

BT sees decline in TV customers while retail broadband remains strong

February 01, 2018  | Subscribers Only

Fateha Begum Fateha Begum Associate Director, Connected Devices & Media Consumption

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UK incumbent telco BT reported a decline in TV customers of 5,000 in the three months ending December 2017, while more than 35,000 retail broadband customers were added in the same period. By year end 2017, the operator had 1.76 million TV subscriptions and 9.3 million retail broadband customers.

Despite the decline, reported consumer ARPU remained strong at £41.30 ($), up 4.8% year-on-year, as a result of greater uptake of higher tier packages by new customers. BT Consumer revenue was flat year-on-year at £1,261 million.

The decline in TV subscriptions is a first for the telco, which launched TV services in Q4 2006 and likely to be as a result of the end of its free premium sports offer. The BT Sport channels were first launched in August 2013 initially offered for free to all BT broadband customers, moving to a fully paid-for proposition in April 2017. 

Our analysis

IHS Markit estimates the BT TV service ended the year with 1.69 million customers with a further 71,000 customers on the EE TV service. Despite the negative quarterly growth in Q4 2017, the total BT TV base grew by an estimated 57,000 customers in the year. The negative growth seen is likely to be as a result of BT introducing monthly subscription fee for access to BT Sport channels in April 2017.

BT launched BT Sport in August 2013 and provided access to the premium sports channels free of charge to BT TV customers, who are also required to take BT Broadband services. The move was in a bid to protect its core ISP business as it faced competition from Sky Broadband, while BT TV remained relatively unaffected by the sports launch.

In a bid to boost its TV base, the operator started charging for BT Sport as an ‘opt-out’ service for those taking only broadband in 2015 while offering it for free to its BT TV customers. More recently, the telco started to charge for access to its premium sports channels across all platforms, and has reported that all BT Sports customers are now ‘paid for’. This allows BT to gain direct revenue from its BT Sport base and fund future investments. Despite the decline in its TV base, the telco reported that the BT Sports channels saw their highest viewing figures since launch, with quarterly viewing up 23% year-on-year. This is likely to be due to the Australia v England cricket series as well as Champions League, Europa League and Premier League football.

BT signed a channel-sharing deal with Sky at the end of 2017 to make its BT channels available via Sky TV from early 2019. The move to make BT Sports channels available via Sky is an acknowledgement of Sky’s leadership in the UK pay TV market, allowing BT to increase its reach and revenue and further utilise its premium sports acquisitions. Currently, BT Sport has more than five million customers, just under half of which we estimate are via Sky. The channel sharing deal also includes the availability of Sky’s OTT service NOW TV on the BT TV platform, raising questions around the future proposition of BT TV.

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