Telecoms profits contract as broadband grows

Margins in the telecommunications sector narrowed in the first quarter as revenues for fixed line and mobile calls shrank, an Ofcom report revealed this morning.

According to Ofcom's market update for Q1 2009, total fixed line revenues fell by 4.4% year-on-year to £2.2bn in Q1 2009. Mobile revenues (for Vodafone, O2, T-Mobile and Orange) fell by 3.7%.

UK residential and small business broadband connections grew by 281,000 (1.6%) to 17.6 million during the quarter (up 8.4% year-on-year). Most of this was because of increasing numbers of LLU-based (local loop unbundling) connections, Ofcom said.

BT's retail broadband market share dropped slightly from 26.5% at the end of March 2008 to 26.4% at the end of March 2009.

Ofcom said fixed voice call volumes (excluding NTS calls) fell by 7.5% to 34.9 billion minutes. This was driven by a 9.2% fall in the volume of calls to mobile numbers.

In contrast, total call volumes for the four mobile operators grew by 6.8% year-on-year to 25.7 billion minutes in Q1 2009. This was driven by a 7.1% increase in calls to UK numbers and a 9.0% rise in international calls. Roaming call volumes were 13.6% lower than in Q1 2008, Ofcom said.

Mobile messaging was also up, with subscribers sending nearly 104 messages per month in Q1 2009 compared to 84 in Q1 2008.

The number of mobile subscribers declined by 1% in Q1 2009 to 68.1 million, compared to the previous quarter but was 1% higher than Q1 2008. Post-pay subscribers accounted for 49% of total subscribers in Q4 2008, compared to 46% in Q1 2008.