Sky vs TalkTalk Unbundled Numbers
I played an interesting game of email tag this evening with a reader from the broadcasting sector that is no great fan of the Murdoch clan. The premise was that if TalkTalk isn’t performing in the broadband sector then surely Sky must be having a nightmare?
First, the numbers: TalkTalk announced that they had unbundled 375k as at 31st March, whereas on 28th Jan Sky announced they had 259k broadband customers of which 87% were on-net or unbundled in other words 225k. In addition, the run rate of Sky was 20k/week which means 180k in total or 157k unbundled. In other words, Sky is forecasting higher unbundled figures than TalkTalk had at 31st March.
Admittedly, the Sky figure is an estimate but Sky have historically, unlike some, outperformed their estimates and in fact James Murdoch said in the week before the results announcement there were 28k unbundled and that they were building the capacity for 40k/week. I am pretty confident that Sky will finish the quarter with more LLU customers than TalkTalk.
Also, I am ignoring the 280k TalkTalk “free” ipstream vs my own estimates of the Sky ipstream customers of around 57k. I would argue that the big difference between the two is that TalkTalk freely admit that their “free” ipstream base is actually losing money, whereas Sky charges a premium price and is trying to make a profit.
Also, this analysis ignores the acquired 327k unbundled customers from AOL – this is true. I am sure Murdoch will put the pedal down in the forthcoming few quarters to try and overtake Carphone and the rest of the field to become the #1 LLU player in the UK.
The financials are also another factor and I think we’ll have to wait for both Sky and Carphone to release their results for a proper comparison. Sky invested £146m in their H1 - £63m in EBITDA losses and £83m in Capex. The biggest point of interest for me is whose M&A strategy is better: Sky’s or Carphone’s? The only thing clear at the moment is that both decision markers are putting their own wallets on the line with them owning substantial equity holdings in their respective companies.
I think the whole analysis highlights another big difference between the companies –the Sky unbundling process is clearly better designed than the TalkTalk process. I’m not sure how much can attributed to superior engineering skills at Easynet (Sky) compared to Opal Telecom (TalkTalk), but I suspect a lot. This is ominous for Carphone on an ongoing base, because I believe as time goes by engineering skills are going to be a big differentiator not only in terms of reliability, but more importantly in cost and traffic management.
Even given all this, the jury is still out on whether either or both will be having nightmares in a three to five year horizon.
First, the numbers: TalkTalk announced that they had unbundled 375k as at 31st March, whereas on 28th Jan Sky announced they had 259k broadband customers of which 87% were on-net or unbundled in other words 225k. In addition, the run rate of Sky was 20k/week which means 180k in total or 157k unbundled. In other words, Sky is forecasting higher unbundled figures than TalkTalk had at 31st March.
Admittedly, the Sky figure is an estimate but Sky have historically, unlike some, outperformed their estimates and in fact James Murdoch said in the week before the results announcement there were 28k unbundled and that they were building the capacity for 40k/week. I am pretty confident that Sky will finish the quarter with more LLU customers than TalkTalk.
Also, I am ignoring the 280k TalkTalk “free” ipstream vs my own estimates of the Sky ipstream customers of around 57k. I would argue that the big difference between the two is that TalkTalk freely admit that their “free” ipstream base is actually losing money, whereas Sky charges a premium price and is trying to make a profit.
Also, this analysis ignores the acquired 327k unbundled customers from AOL – this is true. I am sure Murdoch will put the pedal down in the forthcoming few quarters to try and overtake Carphone and the rest of the field to become the #1 LLU player in the UK.
The financials are also another factor and I think we’ll have to wait for both Sky and Carphone to release their results for a proper comparison. Sky invested £146m in their H1 - £63m in EBITDA losses and £83m in Capex. The biggest point of interest for me is whose M&A strategy is better: Sky’s or Carphone’s? The only thing clear at the moment is that both decision markers are putting their own wallets on the line with them owning substantial equity holdings in their respective companies.
I think the whole analysis highlights another big difference between the companies –the Sky unbundling process is clearly better designed than the TalkTalk process. I’m not sure how much can attributed to superior engineering skills at Easynet (Sky) compared to Opal Telecom (TalkTalk), but I suspect a lot. This is ominous for Carphone on an ongoing base, because I believe as time goes by engineering skills are going to be a big differentiator not only in terms of reliability, but more importantly in cost and traffic management.
Even given all this, the jury is still out on whether either or both will be having nightmares in a three to five year horizon.
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