Sky to grow faster than BT in U.K. broadband market

Telecom Lead Europe: Sky is likely to record the
strongest growth of all telcos in the U.K. broadband market during the next few

According to HIS, Sky in 2011 accounted for more than
half of net broadband subscriber additions in the U.K., with 51 percent. This
exceeded the total for BT which garnered 47 percent of additions.

Sky in the fourth quarter accounted for 68 percent of net
broadband additions, compared to 45 percent for BT.

Together, the two companies represented 113 percent of
net subscriber additions in the fourth quarter. The gains came at the expense
of competitor TalkTalk, whose total declined during the period.

Sky’s growth contributed to a strong expansion for the
overall U.K. broadband market last year. Broadband subscribers in 2011 rose by
the largest number since 2008, with an increase of 1.3 million new connections.

The growth of Sky is being fueled by its large
established business in television, which represents a major subscriber base
that potentially also can be added as broadband customers.

Sky currently has 9.6 million television subscribers in
the U.K., of which only 40 percent are currently triple-play customers.

This leaves 6.5 million customers to which Sky could
offer broadband services. Consequently, there remains a huge opportunity for
Sky to upsell its large and growing pay-TV subscriber base to broadband and
telephony packages, as seen in Q1 2012, during which Sky added a further
212,000 new broadband customers,” said Jon Payne, broadband analyst for IHS.

With both Sky and BT now offering value-add services
with Wi-Fi hotspots since April, we expect the two outfits to dominate the
broadband market through the rest of 2012,” Payne added.

Propelled by a low-cost strategy, Sky’s broadband
subscribers have increased by an average of 73.5 percent each year since the
beginning of 2007, 7.5 times the average for U.K. broadband growth.

HIS suggests that Sky must overcome consumer inertia to
persuade its remaining subscribers to sign up. In particular, non-monetary
issues remain a barrier in Sky’s attempts to convince subscribers to switch
from the broadband services of other telcos.

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