Feature: Growth In The UK Cable Industry
The possibility of the final step of consolidation in the UK cable industry emerged again last week as a deal that could see the merger of NTL and Telewest was rumoured in the national press. There is a history of slow consolidation in the cable industry which has arguably resulted in cable, as a delivery platform, so far failing to live up to its potential. Theoretically, cable should be the perfect platform through which television, internet, interactive services and telephone services can all be delivered.
NTL snapped up Cable & Wireless Communications (CWC) in March this year, leaving Telewest as the only other major UK operator. It has long been understood that the cable industry would have to unite businesses in order to be a significant competitor to BSkyB. The deal rumoured in the press claimed that Dutch group UPC may look to sell its 25% stake in Telewest to NTL. Microsoft, which also holds a quarter of Telewest, would be expected to then make a similar move. Both would be in exchange for NTL’s European assets.
According to the most recent subscriber figures, from July this year, BSkyB is comfortably leading the way in the pay-TV market with 3.6 million customers. NTL has 1.2 million active users of its CableTel service, with a further 933,000 brought in from CWC. Even this combined customer base of 2.2 million still falls well below Sky’s reach. The addition of Telewest’s 1.1 million subscribers to NTL/CWC would create a cable force with a customer base almost the size of Sky’s and way beyond the 774,000 so far achieved by digital terrestrial operator ONdigital.
Over the last five years NTL and Telewest have grown their number of active customers at a consistently faster rate than CWC, according to ITC data. However the trends over this period show that it is only NTL that is continuing to increase the rate of growth of its customer base, whilst CWC and Telewest’s subscriber growth is now slowing slightly.
Predictions to 2008 from Merrill Lynch show Sky maintaining its lead over the cable industry with a subscriber base of 7.3 million. Cable is expected to have achieved just under six million customers by this time, whilst ONdigital’s terrestrial service will have taken around three million.
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