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  • H3G
    H3G
    August 8, 2011

    H3G H1 2011 results: UK strengthens, Italy weakens

    After strong underlying improvements in growth and profitability in 2010, in H1 2011 H3G Europe's service revenue growth was steady at 3% and margins only slightly improved to (underlying) EBIT breakeven. In the UK, service revenue growth accelerated to 7% (from -1% in H2 2010), with EBIT maintained at about breakeven, as the UK company's ongoing strong contract subscriber growth fed through. Italy suffered roughly the opposite fate, with service revenue growth falling to -8%, as its recent subscriber losses fed through, and EBIT remained firmly negative.

  • July 19, 2011

    UK residential high speed broadband outlook: leading the horse to [...]

    BT's plans to deploy next generation access, combined with state-aided rural broadband projects, look set to give almost three quarters of UK households access to high speed broadband by 2016. New wireless technology is a feasible substitute for wireline for some low-end users and in specific areas, but we do not expect it to have a major impact on high speed broadband deployment. BT Retail and Virgin Media will in effect move significant numbers of their customers onto high speed broadband, but without significant price reductions we believe that, even by 2016, consumers' reluctance to pay more will result in two-thirds of households remaining on lower speed options.

  • June 15, 2011

    UK broadband and telephony trends: spring 2011

    In this presentation we show our analysis of trends in UK broadband and telephony to March 2011, based on the published results of the major service providers. This quarter's edition includes an updated outlook for broadband market subscribers and market shares to 2015. Highlights in the quarter included broadband market growth moving back into line with consumer confidence, continuing strong broadband subscriber growth at both BT Retail and Sky, greater stability in the proportion of the market served by BT Wholesale and a significant price increase at O2. We project that, by the end of 2015, about 21 million households will subscribe to fixed broadband, and that Sky's market share will exceed that of TalkTalk Group to rival that of Virgin Media.

  • Placeholder
    Placeholder
    June 14, 2011

    Mobile user survey 2011: More smartphones, more usage of smartpho [...]

    The most dramatic observation from our survey is the surge in mobile data service usage: 48% of UK mobile users now use a data service at least once a month, up from just 30% last year. This increase is substantially all from the increased number of internet-centric smartphones (i.e. iPhone, BlackBerry and Android handsets) in the base. The internet-centric smartphones themselves had substantially no reduction in data usage penetration rates (all at 90%+) despite their volumes surging, with users from all age and socio-economic groups using them for data services. Data service usage penetration on a daily basis actually increased for Android and BlackBerry handsets. This supports our view that it is the nature of these handsets in terms of their ease-of-use for data services that is driving overall usage, and that overall data usage will continue to surge as they continue to diffuse through the subscriber base.

  • Placeholder
    Placeholder
    May 25, 2011

    Mobile revenue growth and outlook Q1 2011

    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.

  • Ofcom
    Ofcom
    April 7, 2011

    Ofcom’s wholesale charge proposals: slightly negative for B [...]

    Some of Ofcom's proposed wholesale charge controls for Openreach fixed access services sound stringent. However, we estimate that the overall financial impact on BT and other players is likely to be very small. We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail's competitors, particularly smaller providers of broadband and business services.

  • H3G
    H3G
    March 31, 2011

    H3G 2010 results: improving to breakeven

    H3G Europe improved its revenue growth and margins in 2010, albeit not by as much as its headline figures claimed. It is currently growing at 5% with EBIT at around breakeven. Given that its parent company is likely to want to keep EBIT positive, it is likely to be constrained on future investment in subscriber growth, limiting its potential going forward. The UK was particularly strong, with dramatically improved contract subscriber growth, and margins improving despite this, driven by the completion of the T-Mobile network share implementation helping margins and the smartphone revolution playing to the company's 3G network strengths.

  • Placeholder
    Placeholder
    March 24, 2011

    UK 4G spectrum consultation: preserving the big 4

    Ofcom is proposing to design the 800MHz and 2.6GHz spectrum auctions to ensure that the UK mobile market remains at four players, through a complex set of rules largely designed to help H3G get the spectrum it needs to remain competitive. However, the sting in the tale is that Ofcom expects H3G to pay around £600m for this spectrum, which it may not want to do, and it is not clear what the backup plan would then be. We expect the general theme of regulators seeking to protect a fourth player to repeat across Europe and across regulatory areas, especially as the US market may consolidate towards three with AT&T's proposed takeover of T-Mobile USA.

  • Placeholder
    Placeholder
    March 9, 2011

    Mobile revenue growth and outlook Q4 2010: Growth improves, but o [...]

    European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative. While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France. The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months.

  • March 4, 2011

    UK broadband and telephony trends to December 2010

    In this short presentation we show our analysis of trends in UK broadband and telephony to December 2010, based on the published results of the major service providers. We include our own estimates where reported data is incomplete. This quarter's edition includes a look at Ofcom's recent research into broadband speeds and its response to the Advertising Standards Authority's review of broadband advertising.

  • Placeholder
    Placeholder
    December 2, 2010

    UK broadband and telephony trends to September 2010

    In this short presentation we show our analysis of trends in UK broadband and telephony to September 2010, based on the published results of the major service providers and Ofcom telephony data. We include our own estimates where reported data is incomplete. This quarter's edition includes a revision to some historical trends resulting from our own interpretation of BT's recent adjustment to the volume of unbundled lines. Highlights in the quarter included exceptionally strong growth in broadband net additions at Sky and the resumption of the long term rate of decline in broadband market growth by volume.
  • Placeholder
    Placeholder
    November 24, 2010

    HD platform differentiation

    European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally. GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern. Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero.
  • Placeholder
    Placeholder
    November 24, 2010

    Mobile revenue growth and outlook Q3 2010: smartphones surge, rev [...]

    European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally. GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern. Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero.
  • Placeholder
    Placeholder
    October 20, 2010

    UK Residential Broadband Market 2010

    The decline in UK residential broadband market growth has paused due to accelerating adoption by older householders and increased household formation. We expect 970,000 net additions in 2010 and 20.5 million broadband households by 2015. However we expect growth will continue to decline from 2011 as the impact of the government spending review feeds into consumer confidence and the market becomes increasingly saturated.¬†As BT's next generation access network is deployed, there is likely to be accelerated improvement in DSL price/performance, with DSL customers migrating to a 40 Mbit/s headline speed as it becomes available. The impact of this is likely to be compounded by Virgin Media up-rating its broadband portfolio from speeds of 10, 20 and 50 Mbit/s to 20, 50 and 100 Mbit/s.¬†In the absence of further consolidation, in market share terms the industry appears set to remain divided into three strategic segments: the ¬Ďbig three', brand extenders, and Sky. We expect residential broadband market revenue (excluding content) to continue to decline gradually, stabilising by 2015 as the impact of market share gain by lower priced ISPs attenuates due to a combination of a maturing market and reduced price differentials caused by NGA.
  • Placeholder
    Placeholder
    October 3, 2010

    Everything Everywhere: UK market leader (for a bit)

    Everything Everywhere's maiden investor day presentation was soured by the disappointing results it reported for Q2 2010, with service revenue growth underperforming its UK competitors by 7 percentage points. At current relative growth rates, O2 will retake its lead by June 2011. The synergy savings targets have been maintained, but focused more towards back office functions and away from front line assets such as shops and network base station sites, with the brands being kept separate for the time being. This is a sensible enough approach, and the cost savings still look eminently achievable. Going forward, the company will have the advantage of a better network but the disadvantage of disruptive integration for the next few years. Its main challenge will be to reverse the current negative revenue momentum, which puts both its revenue and margin targets at risk.