The German DSL Market in Q2 / 2009
DSLWEB Special, September 2009
The wait for the next step in the consolidation of the German DSL market has finally ended: Right at the start of the second quarter of 2009 United Internet announced the acquisition of the DSL branch of Freenet that had been up for sale since mid-2008. After the merger, 1&1 can again claim its old place as the broadband provider with the second highest amount of customers after T-Home.
At the end of Q1 2009, Freenet's DSL customers numbered about 900,000. Until the end of the year, about 700,000 former Freenet DSL subscriptions are going to be transferred to 1&1. For this quarter, 1&1 announced 650,000 additional DSL connections - including the Freenet subscriptions.
Even if T-Home has not been able to acquire as many customers as in the quarter before, with 245,000 new DSL subscriptions it still remains the main driving force for the German DSL market. The undisputed market leader now provides around 11.2 million broadband connections in Germany. This quarter, Telekom's internet TV service T-Home Entertain experienced a boost in subscriptions. By the middle of the year, the number of active Entertain connections had risen by 113,000 to 561,000 in total.
After the number of new customers with Vodafone and Arcor had consistently reached six figures in the last few consecutive quarters, the number of new acquisitions for Q2 2009 remained comparatively moderate with 81,000 new subscriptions. The group's management nevertheless remains confident to reach its proposed goal of 20 percent market share by its own means. The second quarter of 2009 marked the end of Arcor's tenure as autonomous DSL provider. From now on, the group's DSL products are going to be uniformly marketed under the Vodafone brand.
While the rate of customer acquisition of the big DSL providers has considerably decreased, the growth rates of the cable internet providers have remained stable. Where cable broadband connections are available, the cable network providers have without a doubt grown into a serious force of competition for the DSL providers. In the regions that it operates in, Unitymedia already provides 50 percent of new broadband connections. Taken together, the top three German cable network providers – Kabel Deutschland, Unitymedia and Kabel BW – are currently serving around 1.7 million broadband internet connections. With its 787,000 broadband subscribers, Kabel Deutschland is now one of the biggest broadband providers in Germany.
Alice DSL, however, has once again effectively lost costumers. Compared to the first quarter of 2009, the number of DSL connections provided by Alice has decreased by 36,000 – the biggest net loss for the DSL provider so far. As a consequence, Alice DSL, too, may soon change hands: As early as May, Telecom Italia confirmed the start of negotiations about a possible divestment of its German subsidiary HanseNet. Vodafone and Spanish Telefonica have reportedly made initial non-binding offers.
Versatel, too, has to report stagnating numbers of DSL connections. In addition to this, the provider laments “shrinking profit margins caused by the continuing price decline in the private customer sector”. To cut costs for the further development of its own grid infrastructure and the upstream products of Deutsche Telekom, Versatel has settled on a special strategy: By acquiring regional cable network providers, Versatel aims to gain independent access to the end customer’s homes in as many regions as possible. A first step into this new market was the acquisition of Frankfurt cable network provider AKF back in July, further acquisitions are to follow.
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