The Carphone Warehouse have just released AOL Broadband and TalkTalk numbers for the thirteen weeks to 27 December 2008. Revenues declined slightly overall by 2% to £347m, as TalkTalk outpaced its troubled sister AOL Broadband, which lost customers and revenue. In the light of the tough economic climate, TalkTalk did well, adding 73,000 customers over the time period, but AOL Broadband actually lost 37,000 customers, so overall the group added 36,000 new broadband customers. This took Carphone Warehouse’s overall broadband customers to 2.7m.
The ARPU (average revenue per user) increased overall among broadband customers by 5% to £23.13. But this looks unsustainable as AOL Broadband delivers higher ARPU, but is losing customers (as higher ARPU means it is less competitive in the market!).
TalkTalk fights churn
The numbers show that TalkTalk is well positioned to compete in an increasingly cost conscious market, with it’s £6.49 per month deal is amongst the cheapest available in the UK. Churn as a result at TalkTalk continued to be ‘very low.’ Key for Carphone is margin, and this is dictated by the proportion of customers who receive their services via unbundled exchanges. Unbundled customers increased by a further 91,000 during the quarter, taking the total unbundled base to 2.1m or 78% of the broadband customer base. This margin increase will be crucial in the months going forward.
What future for AOL Broadband?
The interesting question though is where to next for AOL Broadband? The brand lacks the commercial punch of TalkTalk and we suspect that financially it is propped up by a large number of long-term customers over paying for their services. And with the credit crunch raging we wonder how much longer these customers will continue to pay over the odds, before switching.
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