UK Q1 2022 Retail ISP and Network Operators Market Analysis
Updated: Jun 21, 2022
Total Q1 2022 FTTP, FTTx, cable, FWA/satellite and DSL wholesale connections stood at an estimated 29.1 million, up from 29 million Q-o-Q and 28.3 million Y-o-Y; with retail connections reaching an estimated 29.2 million during Q1 2022, up from 29 million Q-o-Q and 28.4 million at the close of Q1 2021.
BT’s fixed broadband Consumer net additions dropped by 24,000 in Q1 2022, the first quarter since Q2 2020 for the incumbent to experience a decrease in subscriber numbers.
Openreach’s FTTP base has grown by 263,000 quarter-on-quarter, their largest ever quarterly increase and stood at 1.771 million in Q1 2022 up from 1.508 million in Q4 2021 and 905,000 year-on-year.
At the close of Q1 we estimate that just over 54 per cent of lines live on the Openreach FTTx network belong to non-BT service providers.
Virgin Media O2 (VMO2) saw their fixed segment showing a reduction in numbers from the previous quarter with their broadband net adds down by 1,000 from just over 60,000 in the previous.
We estimate CityFibre to have just under 1.4 million premises Ready for Service out of 1.5 million premises passed at the close of Q1 2022.
Sky UK remains the dominant player in its European operations, however Sky saw 101,000 net broadband losses throughout its European market.
We estimate independent operators FTTx (pre-dominantly FTTP/B) ISPs subscriber numbers reaching around 2.782 million at the close of Q1 2022.
Incumbents unprecedented yearlong gains starting to slow
BT Group saw a reduction in broadband net adds during the quarter with a loss of 27,000 combined consumer and enterprise connections, whilst Virgin Media O2 saw a net loss of 8,100 fixed line relationships (of which 1,000 were broadband). The latest figures are significantly down on the previous quarter’s healthy performances by BT and Virgin who had 44,000 and 60,400 broadband net adds respectively. The quarterly performance is unsurprising given the cost-of-living crisis and consumers generally being more budget conscious, resulting in stronger performances for more affordable suppliers such as TalkTalk and Vodafone.
Gains for larger players and AltNets starting to trend
Vodafone had its strongest quarter throughout the year with 59,000 broadband net additions, compared with 29,000 the previous quarter. The operator saw a total of 139,000 fixed broadband net additions throughout the year in total. TalkTalk has also begun to move into the positive figures with around 5,100 net adds throughout the quarter. Sky continues to perform well as its bundled broadband and IPTV packages go from strength to strength, along with its original and curated TV content remaining a draw for consumers.
As AltNets expand their coverage, promote price freezes and social tariffs, and increase their marketing spends, the larger players are starting to feel the squeeze on their subscriber bases. We estimate urban area MDU-focused Hyperoptic to have around 238,000 subscribers whilst London ISP rivals G.Network and Community Fibre have around 48,200 and just under 56,000, respectively. Rural-focused provider Gigaclear has an estimated 53,000, Trooli which focuses on areas in the South East of England has just over 17,000 with Truespeed which has been rolling out its FTTP network to villages and market towns in the South West has just over 3,000 subscribers at the close of the quarter.
Sky UK continues to bolster Sky’s European base, with Germany starting to turn a corner
Sky reported an overall net loss of 106,000 subscribers in its European market during the quarter, however the lion’s share can be attributed to Sky Italy’s loss of Serie A and Champions League football rights last summer. Comcast reported that a total net loss of around 140,000 European customers throughout the quarter was down to its TV operations in Italy, however the numbers were bolstered by net gains in both the UK and in Germany.
Sky reported a total of 22.9 million European subscribers during the quarter. We estimate Sky UK’s broadband customer base to be 6,234,500 for the quarter, up from 6,194,300 at the close of 2021. Figures include both residential and business customers.
Openreach building at a blistering pace
Openreach’s full fibre rollout footprint covered 7.194 million homes and businesses, passing around 2.6 million premises passed year-on-year. Their rural build is also progressing well with 2.25 million premises passed. Their rollout reached record levels in the first quarter, building at an average run-rate of 58,000 premises passed per week and 752,000 throughout the quarter. The supplier is aiming to average a million premises per quarter and is not far off achieving this.
As its FTTP only incentivisation Equinox scheme gaining traction, with 42 communication providers on board this growth should remain relatively stable over the next quarter. Over 59 per cent of FTTP orders in Q1 2022 were for ultrafast speeds (slightly down from 64 per cent in Q4 2021), and 56 per cent of all FTTP orders in Q4 were from communication providers external to the BT Group compared with 48 per cent in Q4 2021.
Wholesale connections continue to rise as FTTP buildouts grow at scale
At the close of Q1 2022, we estimate wholesale lines to have reached 29.843 million. For the first time, we have reported CityFibre wholesaled FTTP connections which we estimate being at 74,800 for the quarter up from 61,516 in Q4 2021.
CityFibre is going to continue to be one to watch over the next several quarters as they have recently secured “one of Europe’s largest ever Full Fibre financings” of GBP 4.9bn in debt financing, which will see the supplier through to its 8 million premises passed goal by 2025. They have also gone from strength to strength in terms of signing up of resellers on a national level. Vodafone (Gigafast Broadband), TalkTalk (Future Fibre), Zen Internet and Giganet have all signed up to offer their gigabit-capable services throughout CityFibre’s national footprint.
As expected, DSL lines are on the wane and dipped to 3.36 million during the quarter from 3.73 million at the close of 2021. Openreach’s FTTC, G.Fast and SOGEA and SOG.Fast products FTTx technology delivering superfast speeds of at least 30 Mbps+ is still dominating the sector with an estimated 18.64 million lines. FTTP ultrafast (100 Mbps+) lines are steadily progressing however and have risen to around 2.07 million up from around 1.79 million in the previous quarter.