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July 21, 2022

UK Telecoms rollercoaster

The UK telecoms market is going through one of its regular rollercoaster rides. Once again, there is speculation about TalkTalk being acquired – this time by Virgin Media O2 rather than Vodafone. There is some logic to such speculation as TalkTalk still has a substantial customer base, a large national broadband network, and offerings across the consumer, enterprise, and wholesale markets. In addition, it is positioned as a ‘challenger brand’ – essentially meaning it sells on price – which is viable given the current ‘cost of living crisis.’ However, no real offers have yet been submitted – and may well not materialize.

Consolidation of the UK telecoms market is ongoing, ranging from the creation of the Virgin Media O2 joint venture to the reseller and Tier 2 operator space continuing its constant heartbeat of acquisitions in (e.g., Connexin-Pure Broadband; Glide—Velocity1; Wireless Logic-Jola – and that’s just in the last few days).

To add to the day-to-day confusion, almost 40,000 BT staff are set to go on strike at the end of the month – the first such strike in 35 years – because pay rises of up to 8% are deemed unacceptable.

The battle for UK telecoms customers

Customers of all UK telecoms segments, sectors and sizes (but not all locations) are also seeing fiber made available with up to Gigabit speeds – notably as a substitute for, rather than an upgrade to – existing quasi-fiber services, which may encourage churn. This equally holds true for 5G mobile services – again potentially disrupting existing contracts and continuing the battle for customer ownership.

There also happens to be a political event which may affect the market: the election of a new Prime Minister by about 0.2% of the UK population will possibly see a new Cabinet Minister for the Department of Digital, Culture, Media, and Sport (DCMS), which could affect long-term strategy in regulation of the telecoms market.

Finally, the ‘cost of living crisis’ and rising inflation is affecting the budgets both of customers and service providers, adding to the general maelstrom of demand and supply-side confusion in the UK telecoms market. Strap in folks, this looks like a bumpy ride.