Carphone Warehouse attributes broadband downturn to housing slump
Carphone Warehouse believes a slowdown in broadband connections is down to the housing slump rather than an indication we have moved to a predominantly ’switcher’ market.
Shares in the group fell 10% yesterday as its Chief Executive Charles Dunstone admitted that so far this year new, net broadband customers were down on expectations. An assertion that churn rates were falling, particularly at AOL where a free laptop offer was helping the ISP to reverse customer losses, did nothing to prevent the share price volatility.
With new broadband customers growth disappointing, a spokesman for the company told Samknows that lack of new customers does not mean that the same people are switching between ISPs but rather economic uncertainty is holding back new subscriptions.
“The housing market is the key here, moving home is a big motivator for taking up broadband and with house sales down, we’re seeing less growth,” the spokesman assured.
“Churn is actually down and with around 70% of households having broadband there is obviously a large amount of growth potential there when the economic climate improves.”
Nevertheless, as the credit crunch and housing slowdown begin to take effect, BT has certainly put a lot of marketing muscle behind upgrade offers for its BT Total Broadband subscribers to BT Vision and BT Anywhere which tie customers in for another year.
As the country’s largest broadband provider, it is the obvious target for rival ISPs targeting ’switchers’ with lower priced tariffs. However, a spokesman for the company told us it would not comment on whether subscription figures were up or down ahead of next month’s annual results being announced. Hence, the mid July announcement will now be keenly eyed for signs of a slowdown.
Virgin Media is feeling a little more bullish pointing out that its Q1 net additions, for broadband connections, were up on the same period the year before and churn had fallen to less than 1.8%, the lowest since 2004.
Its Q2 figures will make for interesting reading shortly after BT announces its annual results to see if either or both concur with Carphone Warehouse. If not, Dunstone’s message about a slowing housing market will start to ring hollow and the market will start to wonder if, despite assurances that churn is down, the arch poacher of the ’switcher’ market has not itself fallen prey to people moving services.
Tags: Carphone Warehouse
