BT losing new broadband customers to rivals

Credit: chrisdorney/Shutterstock.com

Yet among the financial headlines the ISP also noted that they gained 29,000 new broadband customers in the three months to March 31st, representing a 35% share of the UK broadband market's 82,000 additions for the quarter.

In light of how BT now have 9.3 million broadband customers in total, this 29,000 might sound like a relatively impressive figure, yet it pales in comparison to the 94,000 new broadband customers BT added in the three months to March 31st 2016.

And given that the number of new customers added by BT has been decreasing for well over the past year, the latest round of financial results would indicate that they're losing out to such rivals as Virgin Media, who are increasingly taking advantage of the failure to maintain new additions.

Decline

To be fair, there was at least one encouraging piece of news in BT's latest results, which is that the number of fibre customers they're adding to their books - including existing BT broadband customers upgrading to fibre - has increased slightly year-on-year.

In the latest quarter, 211,000 customers took up a BT fibre subscription, in contrast to 204,000 in the same quarter last year.

However, while this suggests a growing public appetite for fibre as opposed to standard ADSL broadband, there has been a gradual decline over the past few years in the number of new broadband customers BT have added.

Source: BT Group plc.

As the above graph illustrates, 2016 wasn't a particularly good year for BT, with every individual quarter being outperformed - and sometimes quite heavily - by its 2015 equivalent.

Similarly, 2015 also saw declines overall compared to 2014, even though December 2015 saw 11,000 more new customer additions than December 2014 (although it didn't bring in as many new subscribers as December 2013).

Virgin Media

Of course, this steady decrease in the number of new broadband customers may not necessarily indicate that BT alone have a problem. Instead, it could arguably be a manifestation of how the UK broadband market is approaching or has passed "peak demand", with national take up of broadband gradually reaching the point where it can go no further.

That said, the financial results of other ISPs don't quite reveal a decline in new customer additions on the scale of BT's, thereby suggesting that it is more BT's problem than the industry's as a whole.

For example, with Virgin Media, their most recent financial results stated that they added 81,600 new broadband customers in the first quarter of 2017, a figure that is in fact their highest on record.

And as the table below makes clear, it compares very favourably to the same quarter last year and previous quarters in general:

Source: Liberty Global plc.

As the gradual - although not always consistent - ascent shows, there are new customers out there for broadband. It just seems that they're now increasingly going to ISPs such as Virgin Media, rather than to BT.

Customer satisfaction

There are numerous possible explanations for why this migration might be happening.

One is simply that BT have had a fairly bad year in terms of publicity, what with the ongoing Openreach-separation saga, and the accounting scandal that hit BT Italy in January.

However, while these episodes may have dented their public image somewhat, it might just be that new customers are tending to gravitate more towards services they believe could be better.

For instance, in Ofcom's service quality report from April, the regulator noted that 91% of Virgin Media customers reported satisfaction with the speeds they receive, whereas only 80% of BT customers did the same.

Similarly, BT once again ranked the highest in the latest broadband complaints table compiled by Ofcom, recording 33 complaints per 100,000 customers, compared to 13 for Virgin Media (and 7 for Sky).

Such gaps in customer satisfaction are a big part of the reason why customers aren't signing up to BT broadband so readily at the moment, and it's clearly something BT need to work on during the rest of the year if they wish stem the slowdown.