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    October 27, 2014

    EE Q3 2014 results: 4G surges, revenue growth slows

    EE's 4G adoption continued to surge, with 1.4m net adds, over 80% of new contract sales taking 4G and just under 40% of contract base having adopted it. Mobile service revenue growth however slowed to -2.4% from -1.1% the previous quarter, with an extra regulatory hit from the EU's ‘Consumer Rights Directive' doing some of the damage, as well as some underlying weakness. Operating revenue growth (i.e. including fixed and revenue from MVNOs) was much healthier, helped by the fast growing fixed broadband business, but growth in mobile is crucial to driving profitability given the operating leverage involved.

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    October 8, 2014

    EE TV: Triple play focus

    EE has launched a new TV service featuring an advanced set-top box with a snazzy interface offered for free to its broadband/mobile customers. The lack of premium content means that the service is of little threat to the established pay TV operators Sky and Virgin Media, and the lack of integration with mobile or steep quad play discount makes it non-threatening to the mobile market. It does however reposition EE Broadband as a differentiated service, making it more competitive without lowering its headline price, with triple play the focus of this move in our view

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    September 25, 2014

    European mobile in Q2 2014: Underlying weakens again

    European mobile service revenue growth improved by 0.5ppts to -7.2% in Q2 2014, but all of this and more was driven by a reduced regulatory impact; underlying growth has been stuck at around 6% for the last four quarters, with progress in some areas consistently being countered by further pricing pressure. Industry consolidation has progressed to some extent, but would have had little impact in the quarter. Further in-country mobile/mobile mergers are more than likely but uncertainty driven by the changing European Commission may be delaying decisions to move forward. The UK example shows that consolidation is not necessary for market repair, but in the present environment the smaller operators in continental Europe have every incentive to be as disruptive as possible to encourage their acquisition, so further mergers cannot come soon enough.

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    September 8, 2014

    UK mobile market Q2 2014: Pricing stable, volume surges, growth r [...]

    UK mobile service revenue growth finally returned to positive territory in Q2 2014 after three years of decline, largely driven by the MTR impact dropping out, but also helped by a 0.6ppt improvement in underlying growth. Data volumes accelerated markedly during the quarter, with 4G and improved 3G speeds encouraging more video/media activity, which is far more bandwidth intensive (as well as having less of a substitution effect) than text communications activity. As consumers move to higher data bundles, smartphone usage may actually start to enhance ARPU through tariff upgrades as opposed to damage ARPUs through lower out-of-bundle voice and text usage. The outlook remains positive, with headline pricing stable, contract ARPUs stabilising and the competitive environment relatively benign.

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    August 19, 2014

    UK broadband, telephony and pay TV trends Q2 2014: BT leads the w [...]

    Market revenue growth in the UK residential communications sector continued to be robust in Q2 2014 at 5.4%, a slight increase on the previous quarter, with continued volume growth and firm pricing countering weak call volumes and the negative impact of a VAT legislation change hitting Virgin Media and TalkTalk. BT was the fastest growing out of the ‘big four' in revenue terms in Q2 even after the direct revenue impact of BT Sport is excluded, a remarkable turnaround after being in last place a year ago, driven by both volume and ARPU growth continuing to accelerate, with fibre helping both. Since the end of Q2, promotional activity has already intensified, particularly from BT and Sky around the start of the new football season, and churn is likely to be under more pressure at all of the operators, although the disruption is likely to be less severe than that experienced around the launch of BT Sport last year, and we expect all of the major players to continue to grow in net terms.

     

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    July 30, 2014

    EE Q2 2014 results: 4G accelerates, but revenue growth does not

    EE reported impressive operating figures, with 4G net adds accelerating sharply from an already impressive base and mobile contract net adds leading the UK market. Service revenue growth was respectable, but did not improve on the previous quarter despite the surge in premium 4G customers, although profitability did continue to improve as further synergies were realised. EE will maintain a 4G coverage lead over the other operators into 2015, and the base is likely to continue to migrate to 4G in large numbers, but it remains to be seen if it can convert this into improvements on the top line.

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    June 24, 2014

    UK mobile market Q1 2014: Heading for positivity

    UK mobile service revenue growth remained relatively healthy at -1.6% in Q1 2014, despite the absence of some favourable one-off factors in the previous quarter, consolidating the improvements seen in 2013. Underlying growth improved a touch to 0.3%, and given that the regulatory impact will drop out next quarter, reported revenue growth may well turn positive in Q2. Service revenue growth among the ‘big three' has re-converged to around -3% to -4%, with Vodafone improving due to strong recent subscriber gains, and EE worsening slightly after a strong previous quarter. H3G's growth worsened due to the previous quarter including some one-off benefits, but it remains very strong at 10%, with contract ARPU having stabilised. We expect the market environment to continue to be relatively benign, with the biggest disruptive threats Vodafone, which is currently competing on quality but may become more aggressive on price if it loses patience, and the fixed line operator MVNOs, who have significant distribution disadvantages but nonetheless can harm the market with discounted pricing.

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    March 24, 2014

    European mobile in Q4 2013: Focused on consolidation

    European mobile service revenue growth again disappointed in Q4, dropping slightly from -8.9% to -9.1%, with underlying revenue growth dropping a little further from -6.0% to -6.3%, again reaching a record low. There had been hopes that improved GDP growth would drive a volume rebound, that price declines would start to annualise out, and that declining out-of-bundle usage would wane in its impact as this usage declined. In the event, ongoing price competition from smaller operators, MVNOs and quad play offerings, combined with surging use of OTT communications platforms, have dominated trends. In the medium term, the development of 4G and Vodafone's Project Spring may bring some much needed network differentiation back to the market, allowing pricing power to return to the larger operators. However, it will be 2015-2016 before these factors come into play: in the short term, the main source of optimism is consolidation.

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    December 16, 2013

    UK mobile market Q3 2013: Flattening out

    UK mobile market service revenue growth improved on a reported basis in Q3 to -3%, but was unchanged on an underlying basis, still not a bad result after six consecutive quarters of underlying growth declining, albeit in the context of rapidly improving macroeconomic conditions. All four operators now offer 4G services, with O2 and Vodafone launching within the quarter and H3G in December. EE will nonetheless maintain its coverage and speed advantage for 2014, but others (most likely Vodafone) may challenge thereafter. H3G is offering 4G at no extra cost, reflecting its focus on unlimited data and meeting the capacity requirements for this, and O2 has recently cut its 4G tariffs to match those of 3G (but with a high minimum entry point), leaving EE the only operator with an explicit 4G premium. The overall outlook is mixed – we would expect some improvement to revenue growth into 2014 as the MTR impact wears off and the dilutive effect of unlimited tariffs wane, but this may be countered by a lack of mid-contract price increases, and while 4G is likely to benefit all as it drives data volumes and encourages package upgrades, the impact will be gradual.

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    December 3, 2013

    European mobile in Q3 2013: Improving to minus nine

    In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

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    October 24, 2013

    EE Q3 2013 results: 4G rises in a weak market

    EE's 4G base continued to accelerate, with 8% of its contract subscribers now on a 4G plan less than a year after launch, and it should accelerate further with the launch of cheaper 4G handsets allowing much lower entry price points from next month. However, the market remains weak, with EE's underlying growth still negative, and any benefits of 4G being more-than-countered by accelerating weakness in overage and prepay revenues. Firmer price increases are needed for full market repair, but these appear more evasive than ever with Ofcom's recent decision severely restricting the scope for mid-contract adjustments.

  • August 22, 2013

    UK mobile market Q2 2013: 4G on a budget

    UK mobile market revenue growth improved in Q2, rising to -3.6% from -5.0% in the previous quarter, but we see this as driven entirely by an easing in the regulated MTR impact, with underlying growth actually dropping. O2's revenue growth has continued to improve, Vodafone and EE's revenue growth both improved roughly in line with the market, and H3G's growth declined but remained much above the other three Both Vodafone and O2 announced plans to launch 4G on 29 August but both also have modest roll-out plans, with only 13 cities due to be covered by the end of the year, leaving both with less than half the coverage of EE, and H3G is not planning to launch until Q4. There is some debate over how much consumers are likely to value 4G, with a number of consumer surveys putting interest at a low level. Our own survey is consistent with this, but reveals that interest among high-end smartphone owners – who tend to spend more on handsets and airtime – is very much higher O2 is now selling all its upper end contract plans under the ‘O2 Refresh' structure, which splits handset and airtime fees but in such a way as to allow it to make good margins on handset sales, a clever way to take advantage of smartphone popularity as opposed to working against it as many operators do. The other operators may well follow suit

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    August 13, 2013

    UK broadband, telephony and pay TV trends Q2 2013: Revenue strong [...]

    UK residential communications revenue growth was again strong in Q2 2013 at 4% supported by strong unit volume growth (despite seasonal factors in the quarter) and firming ARPU, helped by firm pricing and high speed broadband take up. High speed broadband adoption continued apace at BT and Virgin Media, but much more slowly at the other operators. This may start to change in the second half of the year, as Sky and TalkTalk market the product more aggressively, and a wires-only self-install version becomes available. Overall the market outlook remains very healthy, with two potential areas of market disruption – BT Sport and regulated pricing – looking like they will resolve without prompting a damaging price war.

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    June 4, 2013

    European mobile revenue growth and outlook Q1 2013: Hitting a nad [...]

    In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

  • June 3, 2013

    UK broadband, telephony and pay TV trends Q1 2013: Revenue strong [...]

    UK residential communications revenue growth was very strong in Q1 2013, rising to 4.6% from 2.1% in the previous quarter with most of the improvement driven by improved unit ARPU growth, which turned positive for the first time since early 2011. We expect unit volume growth to remain strong for the rest of the year, although ARPU growth is likely to moderate as overlapping price increases drop out, but it is still likely to be firmer than 2012 given the continued growth of high speed broadband (at least at BT and Virgin Media) and firm pricing in general. The outlook for market shares is less certain, with a number of difficult-to-predict factors coming into play, and while we do not expect dramatic changes in market share to result from any of these factors, they do create a risk of pushing operators to adopt more aggressive pricing strategies, which would disrupt an otherwise very healthy outlook.

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    June 2, 2013

    UK mobile market Q1 2013: 4G progresses but does not transform

    Overall UK mobile revenue growth slipped slightly in Q1, dropping 0.4ppts to -4.3%, although, taking into account the leap year effect, underlying growth likely improved a touch, marking the second quarter of growth being at least stable. EE announced 4G subscriber figures for the first time, reporting 318k subscribers at the end of the quarter, a very respectable figure given coverage, handset and price tier limitations. We expect this figure to grow strongly as coverage rolls out and 4G handset availability spreads, but the 4G revenue premium is still unlikely to be significant in 2013. The outlook for revenue growth in the rest of 2013 is fairly positive – the MTR impact will partly drop out from Q2 onwards, boosting reported revenue by over 2ppts, some mid-contract price increases will take effect, and pricing (so far) has remained reasonably stable.

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    June 26, 2012

    UK mobile user survey 2012: networks over handsets (apart from th [...]

    In this report we show the findings of our 2012 UK mobile user survey. The report is a wide ranging analysis of the mobile market based on our consumer research, focusing on the competitive landscape among the mobile operators and smartphone manufacturers, and the changing consumer behaviour that has and will continue to impact the market

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    June 26, 2012

    UK mobile user survey 2012: networks over handsets (apart from th [...]

    In this report we show the findings of our 2012 UK mobile user survey. The report is a wide ranging analysis of the mobile market based on our consumer research, focusing on the competitive landscape among the mobile operators and smartphone manufacturers, and the changing consumer behaviour that has and will continue to impact the market

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    May 2, 2012

    Everything Everywhere Q1 2012 results: Encouraging volume bounce [...]

    EE's subscriber growth in Q1 was solid enough given a market slowdown, but disappointing given T-Mobile's Full Monty tariff launch. With O2's ‘On and On' launched in late March, the outlook for subscriber growth will be tougher in the rest of 2012. Service revenue growth was more encouraging, improving by 1.5 ppts after a disappointing Q4. This appears to have been largely volume driven (i.e. existing users using their handsets more), which is encouraging for the operators yet to report Q1 figures (i.e. Vodafone and O2). The company's main competitive weapon going forward should be the quality of its network – even post-consolidation it will have more 3G sites than any other operator and may be able to use its 1800MHz spectrum to gain a head-start in 4G. However, communicating that both brands have an outstanding network, without encouraging subscribers to migrate to the lower-priced T-Mobile, will be problematic.
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    March 19, 2012

    Mobile revenue growth and outlook Q4 2011: from bad to worse

    In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.
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    March 19, 2012

    Themes from Mobile World Congress

    Mobile operators, services and handset makers are diverging – they all come to the MWC but have increasingly little to say to each other as their businesses move in very different directions. In the context of -5% European mobile revenue growth, the MNOs at the MWC were a sober bunch, focusing on industrial services, defensive moves around messaging, and a (not unreasonable) plea to regulators for some relief. As competition in Android intensifies between hundreds of black plastic rectangles, the picture for OEMs looks tough but Google's failure to make Android work well for developers may also start to bite, leaving an opening for Nokia and Windows Phone.
  • February 27, 2012

    UK fixed telecoms market: broadband and telephony trends to Q4 20 [...]

    In this presentation we show our analysis of trends in UK broadband and telephony to December 2011, based on the published results of the major service providers. Highlights for the December quarter include a return to the lower rate of broadband market growth seen prior to mid-2010, accelerating growth in the number of subscribers to high speed broadband and the continuing increase in market share of BT Retail and BSkyB at the expense of virtually all other players. This quarter's edition includes a look at Openreach's wholesale FTTP On Demand, planned for launch in 2013. Following announcements by Virgin Media to double the speeds used by most cable customers, and by BSkyB to launch high speed broadband offer in April based on Openreach's wholesale VDSL product, by 2016 we now expect about half of UK residential broadband subscribers to be on high speed broadband, i.e. xDSL or GPON at 30 Mbit/s plus, and DOCSIS at 20 Mbit/s plus.
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    November 24, 2011

    Mobile revenue growth and outlook Q3 2011: The outlook bleakens

    In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

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    August 15, 2011

    Mobile revenue growth and outlook Q2 2011: MTR cuts hit but stabl [...]

    In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request