Telenet blames OTT competition on ‘above average’ video churn

Belgian cable operator Telenet reported that subscribers to its total basic and enhanced video services decreased by 11,900 quarter-over-quarter to 2.07 million – an “above the average churn” compared to previous quarters in 2014. 

Announcing its first quarter 2015 results, the Liberty Global-backed operator attributed the churn to “the intensely competitive environment, characterised by the availability of other digital and over-the-top (OTT) platforms in our market,” as well as its January 2015 price adjustments.

“The aforementioned organic loss rate excludes migrations to our enhanced video services and represents customers churning to competitors’ platforms, such as other digital television providers and satellite operators, or customers terminating their television service or having moved out of our service footprint,” said Telenet in its Q1 earnings announcement.

“Given the historical video penetration in our footprint, the limited expansion of the number of homes passed and strong competition in the domestic TV market, we anticipate further churn of basic video subscribers, offset by further growth in multiple-play subscribers, generating a higher ARPU relative to the basic video ARPU.”

Telenet did add 8,000 enhanced video subscribers in Q1, bringing this total to 1.69 million customers. However, it noted that this was a slowdown in additions compared to last year, when it saw strong uptake in Q3 2014 after it phased-out its SD video platform.

The operator said that as of March 31, 2015, approximately 81% of its video customers subscribed to its enhanced video services compared to around 79% a year earlier.

At the end of Q1, roughly 207,300 customers subscribed to Telenet’s ‘Sporting Telenet’ pay TV channels, up slightly compared to Q4 2014.

Some 23% of Telenet’s digital TV subscribers now also use its ‘Yelo TV’ multiscreen video app, while its subscription VoD packages ‘Play’ and ‘Play More’ had 176,700 customers, up 17% year-on-year.

Overall, Telenet reported a 6% year-on-year revenue increase to €443.4 million. Operating profit was down 11% to €131.4 million and net profit was down 12% to €34.1 million.

Telenet CEO, John Porter said: “As in the previous quarter, net subscriber growth for our advanced fixed services of enhanced video, broadband internet and fixed telephony was impacted by the intensely competitive environment and the fading impact from the revamp of our triple-play bundles ‘Whop’ and ‘Whoppa’.

“During the quarter, we also experienced a further anticipated increase in churn for all advanced fixed services, in addition to basic video, as a result of the January 2015 price adjustment. Still, we achieved 34,200 net subscriber additions to our advanced fixed services in the quarter, while continuing to see a solid inflow of triple-play subscribers.”

The results come a week after Telenet agreed to buy domestic mobile operator BASE Company for €1.325 billion from Dutch telco KPN.