Mobile operator Vodafone has moved into the consumer ISP and fixed telephony market in the UK, under the brand ‘Vodafone Connect.’ With the UK home broadband market already approaching saturation point, gains for a Vodafone fixed play will likely come at the expense of existing ISPs and fixed phone providers.

Vodafone’s offer is firmly targeted at its existing mobile customers, encouraging them to upgrade to Vodafone Connect for prices starting from £2.50 per month (for 12 months, £5.00 following this period) for ADSL2+ broadband and up to £10.00 per month (for 12 months, £20 following this) for the highest speed VDSL product.

A consequence of this strategy is that existing ISPs which count high numbers of Vodafone mobile customers amongst their broadband subscriber base are more exposed to churn risk. Ampere Consumer research from June 2015 (1000 respondents) indicates that of those Vodafone mobile customers who are Internet users, over half take BT or Sky broadband. A further third take Talk Talk or Virgin Media.

Switching the view to an ISP perspective reveals those broadband service providers which are most exposed to Vodafone mobile contracts – and the associated churn risk. Of the major ISPs, BT is currently most exposed. 18% of BT Broadband customers took a Vodafone mobile subscription as of June 2015, followed closely by 17% of Sky’s broadband subscribers. By contrast, Virgin Media, and to a lesser extent Talk Talk, are less exposed. Just 13% of Virgin Media’s broadband subscribers took a Vodafone mobile contract - a consequence of the company’s MVNO play and upsell across its customer base.

Vodafone’s offer is competitively-priced next to both BT and Sky’s broadband offers – beating BT on price across the unlimited usage packages, and comparing favourably to Sky’s bandwidth-capped offers. BT’s primary defence is in the form of BT Sport, which comes free with BT TV and costing just £5.00 per month with BT Broadband alone. Dislodging sports fans from these two providers will prove to be a difficult task for Vodafone – the higher priority targets will be those 53% of BT Broadband customers (and the lower proportion of Sky subscribers) who just aren’t that interested in sport.

It is therefore likely to be the besieged Talk Talk which is hit hardest. Only slightly less exposed to Vodafone than Sky, Talk Talk lacks the content defences of BT and Sky, and tends to appeal to a lower-spend segment of the UK population. Moving further into the highly competitive and expensive exclusive content market would be ill-advised for Talk Talk, but a further push of its own MVNO service – to play Vodafone at its own game – offers an alternative shield for the UK ISP.