BT has made a cash offer for the UK ISP Plusnet and so the broadband consolidation begins. The deal, based on a cash offer of 210p per share, will add 200,000 broadband subscribers to BT’s own broadband customer base. Unsurprisingly the offer has been unanimously recommended by the PlusNet directors and values the company at £67m or £335 per customer which is approximately the revenue from 1 years worth of BT (option2) broadband.
One comment I read summed up this deal beautifully “it seems an awful lot to pay for a turkey at this time of year. Mind you, the bill for the sage and onion stuffing is gonna be eye watering”.
Of course BT are not alone in looking to acquire a larger customer base. Recently Pipex spent £24m expanding doing so with its acquisition of Bulldog’s customers and the Toucan service making it the sixth largest retail broadband player in the UK- see the table below – but will this be enough to make it a serious challenger to BT Retail, NTL, and the like or will it be the next one to be acquired? Based on the cost per customer acquisition (£335) above that would value Pipex at £200m.
Personally I don’t get either deal. Instead of paying to acquire customers wouldn’t they be better off getting customers to switch of their own volition simply because they offer the best value services. Sadly that tactic doesn’t seem to be working for BT because only last week figures showed that although BT grew its subscriber base in line with the expanding market, overall it reduced its market share to competitors like Sky and Carphone Warehouse.
So as Christmas is fast approaching as a consumer and not a shareholder here is my BT wishlist Santa:
Instead of spending £67m I would like to see the monthly fee for broadband, line rental and call charges reduce. I would like to see Openzone made cheaper more reliable and widely available. I’d like to meet a BT Fusion user. I would like to see wireless broadband (WiMax, HSCDA or 4G) rolling out so that the mobile web can really start to take off. I’d like to see BT Vision (IPTV) before Christmas, not just for the people in Cardiff or near BT Centre. I’d like to see what the BT plans are for rolling out IPv6 in UK before China and India bag every address. I would like to see the UK come in line with broadband speeds of other European countries with ADSL2+ rolling out quicker than the planned 2008 timeframe. Oddly I am not alone in this last wish.
PlusNet, a large Sheffield-based ISP which resells BT’s wholesale services, is frustrated by the delays to ADSL2+. “Through conversations with our customers and our user group, we know the demand for higher speeds is there,” Neil Armstrong, PlusNet’s product development director, told ZDNet UK. Armstrong took issue with BT’s assertions that its delays had the agreement of ISPs. “It’s frustrating that BT Wholesale can’t match the timescale of the LLU providers,” he said, adding that PlusNet may turn to Tiscali, another wholesale service provider, if BT can’t provide what it needs.
Sadly neither Santa nor Jim is going to grant my wishes to fix these problems before (next) Christmas.
Top 10 ISPs By Users supplied by ISP Review.
| No. | Name | Subscribers |
| 1. | BT Retail | 3,000,000 |
| 2. | ntl:Telewest | 2,980,400 |
| 3. | AOL UK | 1,500,000 |
| 4. | Tiscali | 1,336,000 |
| 5. | Orange | 986,000 |
| 6. | TalkTalk (CW) | 625,000 |
| 7. | Pipex | 570,000 |
| 8. | PlusNet | 198,000 |
| 9. | Virgin.net | 193,200 |
| 10. | Tesco | 132,000 |
Comment